Ducks Unlimited's Southern Region recently received three gifts of land in support of our mission, but it’s not always the land itself that achieves our conservation goals.
Why would someone give away marketable land? Like gifts of appreciated stock, charitable gifts of land have tax advantages related to unrealized long-term capital gains. If someone has owned a residential or commercial lot for many years, the increase in value over time leads to significant taxes when the land is sold. By giving the appreciated land to Ducks Unlimited, the donor can take a tax deduction for the fair market value of the property on the day it is given and avoid paying any capital gains tax. DU gets the full value of the gift toward our mission and will not pay any gain tax when sold for operational revenue.
These trade lands are gifts of property that can be cashed in when DU decides to trade them in the real estate market. They are important sources of unrestricted revenue. For the donor, the tax benefits for giving land exceed the benefits from selling the land and donating the proceeds.
Good trade land projects have three elements: 1) the land is marketable, 2) the land is debt-free and 3) the land is valuable enough to justify the due diligence costs and time associated with acceptance and management of the land.
How does it work?
Trade land donations are part major gift and part real estate transaction. The first call is usually to DU’s national headquarters to speak with gift planning staff. If the gift is deemed appropriate, the gift planner collaborates with regional staff and the project is presented for approval by the national Land Review Committee. Once approved, a donation agreement is signed with the donor. Staff in the region manage accepting title to the property. The process includes due diligence typical of conservation properties but without the habitat assessment and resource management planning components.
As part of the project evaluation, Ducks Unlimited will get a market analysis and consult with real estate professionals in the local market. A title investigation will clarify whether there are any mortgages on the property. Experience and budgeting in the early phase of the review will establish whether the time and cost of accepting and holding the gift is worth the long-term value. DU policy requires a minimum gift value of $25,000. Land must be sold at or above the appraised value claimed by the donor if sold within three years of acceptance.
Example 1: 92 acres of undeveloped industrial land near Atlanta, Georgia.
A large national material company opened a quarry near Atlanta in the early 2000s, but the site was remote from their other holdings and they scaled back production due to competition. After sitting idle, they looked to DU as a partner to receive the land as a gift. DU evaluated the market and entered into an agreement with the company to reclaim the land and make it marketable for commercial use, retiring the mineral rights. Ducks Unlimited is working with real estate agents to lease/option the property for commercial use. The site is close to Interstate 20 and in the metro area surrounded by other commercial property. Over the next three years, DU will manage, lease and sell the land with an anticipated unrestricted revenue influx of at least $1.2 million.
Example 2: 140-acre residual property around residential development near Richmond, Virginia.
A longtime Ducks Unlimited supporter in Virginia died in 2013, leaving some land in a charitable trust to be distributed to a charity chosen by his children. The property consists of lowland and slopes left over from an adjacent residential development and has frontage on the Chickahominy River not far from Richmond. DU evaluated the market and agreed to take the property with a plan to auction it for proceeds. Within a year the land was turned into $140,000 in unrestricted operating funds.
Example 3: 1.7-acre commercial lot on major highway near Waycross, Georgia.
A brother and sister inherited a 1.7-acre commercial lot in Blackshear, Georgia. Rather than selling the property, they wanted to donate the land to Ducks Unlimited for a tax deduction. The site is along a major four-lane highway and is ready for development. DU conducted a market analysis and agreed to accept the gift. Based on the appraised value, the gross unrestricted operational revenue for DU is at least $70,000.