Golf Business
Course owners could benefit from greater education on how to take advantage of conservation easements.
Is your land doing all it can for you? Conservation easements could be the key to unlocking tax savings on your golf course, although they are not appropriate for every situation. How can a course owner know if entering into a conservation easement is the right decision? This is the question that course owners around the country are struggling to answer.
A golf industry outlook survey conducted by Foley & Lardner's Golf & Resort Industry Team earlier this year found that more than 80 percent of respondents do not plan to take advantage of conservation easements. The survey also found that nearly 65 percent do not plan to depreciate their tees and greens. Clearly, these figures reveal an opportunity for course owners to take advantage of these potential tax benefits.
What are conservation easements and what purpose do they serve? A conservation easement is a covenant that permanently limits or restricts the future use of property exclusively for conservation purposes and is typically donated to a qualified tax-exempt organization or to a federal, state or local government, that will enforce the easement. A conservation easement permits the owner to continue to hold title to the land and use it according to existing purposes, subject to the easement.
To qualify as a conservation easement, the easement must be exclusively for one or more of the following conservation purposes: 1) preservation of land for outdoor recreation by, or the education of, the general public; 2) protection of a relatively natural habitat of fish, wildlife, plants or similar ecosystems; 3) preservation of open space; or 4) preservation of a historically important land area or certified historic structure.
The primary purpose and benefit of granting a conservation easement is the fulfillment of the landowner's altruistic goals of permanently conserving the land to protect its environmental integrity. Also, in exchange for relinquishing development or other rights associated with the land, property owners may qualify for substantial income and estate tax savings.
Notwithstanding the potential tax savings, many golf course owners currently do not take advantage of these opportunities. Some of the reasons include lack of awareness of the benefits of conservation easements, uncertainty as to whether a property qualifies, prior relinquishment of development rights and a perception that the procedure for granting a conservation easement is too time-consuming or expensive to implement. However, with the potential of qualifying for substantial tax savings, those in the golf industry should seriously consider whether a conservation easement could be beneficial.
To initiate the process, a course owner should contact a law firm that is experienced in handling conservation easements. The firm will assemble a team of accountants, property appraisers and environmental experts who can help advise the course owner whether a conservation easement would be appropriate under the circumstances.
It is important to remember that granting a conservation easement is not just a technique for saving taxes, but a method of preserving land for future generations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
