Articles
Making a Gift of Your Land
Photo: Lyn Winans
Who Does What
An important part of preliminary negotiations between the landowner and the Land Trust will be deciding who takes responsibility for the transfer process.
The sequence of steps that must be taken to complete the transfer of acreage to a Land Trust is consistent from property to property and is something that can be done by the landowner should he or she so choose.
In most cases, the Land Trust assumes responsibility for seeing that these steps are completed because it is familiar with the routine. No matter how the process is managed, the donor should always get independent legal, financial, accounting and realty advice.
Ecological sensitivity
While it is unlikely to be the overriding consideration in deciding to donate land to a Trust, there are accompanying tax advantages. The significance of the benefit depends on whether or not the property is certified as being ecologically sensitive.
Ecological sensitivity is determined by Environment Canada through an evaluation of a baseline report describing the physical and ecological characteristics of the property in question.
The applicant attempts to justify the ecological sensitivity designation by proving compliance with one or more of a series of national or provincial selection criteria that are listed in the Environment Canada website: http://www.cws-scf.ec.gc.ca/egp-pde/default.asp?lang=En&n=C6232D19-1#ontario.
Environment Canada either confirms or denies the applicant's interpretation.
Before it is sent to Environment Canada, the baseline information can be used in making an application to the Ontario Ministry of Natural Resources Managed Forest Tax Incentive Program.
Securing MFTIP status satisfies one of the ecological sensitivity criteria under the federal ECOGIFTS Program and has the added benefit of reducing taxes now and into the future.
Property Value
To establish a fair market value for the property, the land must be appraised by a fully qualified professional appraiser. The cost of an appraisal is frequently borne by the Land Trust.
Taxation
Photo: Lyn Winans
Donation of a property does not eliminate the need to pay the capital gains tax associated with it unless it is declared ecologically sensitive by Environment Canada.
Without that designation, 50 per cent of the value of the donor's capital gain must be added to his/her income and then taxed at the applicable rate.
The receipt given by the Trust for the full value of the land donation can be used to generate a charitable tax credit. If the land is ecologically sensitive, the credit can be used to offset up to 100 per cent of the donor's taxable income and the unused credits can be carried forward for five years.
The Transfer
With all applications submitted, certificates obtained and clearances given, all that remains is for the recipient's lawyer to establish that there are no encumbrances on the property or the title to it that would cast a shadow over the land transaction.
Upon completion of the review, the transaction is completed and the title to the property is transferred at the Registry Office and the Land Trust issues a tax receipt to the donor.
For ecologically sensitive properties, a Statement of Fair Market Value and a Certificate for the Donation of Ecologically Sensitive Land are issued as well to ensure the donor receives the full tax benefit to which he/she is entitled.
The Land Trust Commitment
While the process of making a land donation may seem somewhat daunting, Land Trusts are ready and willing to help each property owner through the process of donating their land for its preservation in perpetuity.
The Trust will provide plain language interpretation of terminology, explain options, break the process down into a series of discrete steps, ensure that each step is completed in sequence and then bring the transaction to a successful conclusion followed by on-going management.
The Haliburton Highlands Land Trust has dedicated itself to the performance of these tasks on behalf of landowners in Haliburton County. With the HHLT's help, the donor's role should not be much more complicated than in an ordinary land sale.
(Ron Reid of the Couchiching Conservancy and Bob Barnett of the Escarpment Biosphere Conservancy assisted with this article, which was edited by Neil Campbell of the HHLT.)
Last Updated: Jun 29 2010 12:10:21 am.
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Photo: Lyn Winans
Did You Know...
As of August 2009, 7 new species that have been identified in Haliburton County have been added to the Ontario government's Species at Risk list. Chimney Swift and Whip-poor-will are now listed as Threatened. Snapping Turtle, Common Nighthawk, Olive-sided Flycatcher, Canada Warbler and Bald Eagle are listed as Special Concern. Read the full article.
