Real Estate Program: Donating/Gifting Your Land

Protecting your land through gift and estate planning is a great way to make a lasting contribution to future generations while providing your with potential federal and state tax advanteages. A gift of land may qualify you and your heirs for reduced income, gift or estate taxes, and reduced capital gains taxes. Since tax laws change frequently and financial advantages vary depending on your own situation, please consult an attorney or tax advisor.

Qualifying Land

Gifts of land to the Wisconsin Department of Natural Resources (WDNR) will be gratefully accepted if they meet one or more of the following cirteria:

lands within the boundaries of WDNR projects
lands that contain old growth forests, native prairies, trout streams, undisturbed lake shore or stream banks
lands that adjoin protected natural areas
areas that adjoin protected natural lands
lands that contain habitat for endangered or threatened plans or animals
lands that contain unique scenic, historic, geographic, or archaeological features

In some instances, land are offered that the WDNR can't accept because of geographic location or restrictions on uses. In such cases, the WDNR will refer you to an appropriate private, non-profit conservation organization or local unit of government that may be able to accept your gift.

Bequests

Bequests are gifts you make through your estate plan. Through your will or revocable living trust, you may choose to leave your land to the WDNR after your lifetime. A bequest of land to the State of Wisconsin should not be considered without first discussing the idea with the WDNR.

One benefit of this approach is that assets passed in this way may be excluded from your estate for federal tax purposes, thereby reducing the amount of estate taxes your heirs will owe. However, because the gift is revocable, it does not qualify as a charitable donation for income tax purposes.

Life Estate

A life estate is often referred to as a "remainder interest donation." It allows your land to be preserved in its natural state while you continue to live on and use the land. Other benefits to this approach include:

the value of the gift may provide a significant income tax deduction for up to 5 years
the donated property is not subject to estate tax
the amount of the estate that can pass tax-free to a surviving spouse may further reduce any tax burden
family members may also be included in the life estate

Conservation Easements

Another way to retain ownership and use of your land while preserving its natural and historical values is to donate a conservation easement to the WDNR. A conservation easement is flexible and gives you the power to influence the future use of your land, even after sale of the land or your death. To be eligible for tax benefits, a conservation easement must be perpetual (permanent). Any concerns you may have about public access or future uses of the land may be specifically addressed when you work with the WDNR on the details of your easement.

Conservation easements made in perpetuity become a charitable contribution. Benefits to this approach may include:

the fair market value of the donation may be deducted from your adjusted gross income–reducing income tax.
the change in use of the property may further reduce property taxes — contact your local tax assessor for your specific situation
a reduction in your estate taxes, while you or your heirs retain ownership and use of the land

Direct Gift

You may be in a position to gift your land directly to the WDNR for preservation. A direct gift means that you give the WDNR title to the land without any monetary compensation. Benefits to this approach include:

knowing your land is protected forever and stewardship will be consistent through the years
the fair market value of the donated land may qualify you for certain income tax benefits
property tax relief
one-time action resulting in less paperwork