Protect land as open greenspace for generations!
There are many benefits to donating land to the Foundation. Our mission to support transformational parks begins with preserving open greenspace for generations to enjoy. Your generosity will give the community access to greenspace for better mental and physical health and protect vital ecosystems.
1. Capital Gains Tax Relief: You avoid all capital gains tax by donating your property. This relief can be significant since the taxed percentage is 15-20% of the sale value.
Example: You sell your property to John Smith for $500,000. You initially purchased the property for $30,000 in 1987. Assuming your annual income is $50,000, and your tax status is married filing jointly, your estimated capital gains tax bill would be roughly $90,000. Donating your property instead eliminates the capital gains tax.
2. Increased Tax Deductions: Donating your property allows for a tax deduction of the property's fair market value. Under IRS tax code, you can deduct up to 30% of your taxable income and carry forward any unused deduction up to 30% for an additional five years. However, the IRS allows for added benefits for donating your property as a conservation easement to a government agency, such as the West Lafayette Parks and Recreation Department. Suppose you donate your land as a conservation easement to a government agency. In this scenario, you can deduct up to 50% of your taxable income the year of the gift and carry forward any unused deduction up to 50% for an additional 15 years.
Example 1: You donate your land, not classified as a conservation easement, to Purdue University. The land has a fair market value of $500,000, which is the value of your donation. The tax deduction you receive is 30% of your taxable income. Assuming your annual taxable income is $50,000, you would be able to deduct 30%, or $15,000. You can carry forward the deduction for an additional five years, giving you $90,000 in tax deductions.
Example 2: You donate your land to the West Lafayette Parks and Recreation Foundation as a conservation easement. The land has a fair market value of $500,000, which is also the value of your donation. As a conservation easement, the tax deduction you receive is 50% of your taxable income. Assuming your annual taxable income is $50,000, you would be able to deduct 50%, or $25,000. You can carry forward the deduction for up to an additional 15 years, giving you a total of $400,000* in tax deductions (*you cannot deduct more than your total gift value).
Are you interested in making an impact? Contact us today to start the conversation about an estate gift. With today’s tax structure and potential future changes in tax legislation, taking advantage of the tax benefits by donating your land to a 501(c)3 or government agency, like the West Lafayette Parks and Recreation Department, can be of more value than the selling of the land.
The information is intended to inform you of the option as you decide on the future of your land. It is always encouraged to consult your attorney and financial advisor(s) to explore the benefit with accurate details for your situation. Resources valuable to explain this option are these websites: Land Trust Alliance and Capital Gains Tax Calculator.