This technique is utilized in many states and counties throughout the country. Generally a governmental or land trust entity purchases the development rights to open land or agricultural land in order to keep it in ranching or undeveloped. Development rights are sold on a voluntary basis. The value of those rights usually varies from 30% to 80% of the fair market value of the property. The landowner is able to obtain the equity or development value from the property, keep the land open or in productive agriculture, keep it in the family and pass it on to the next generation, and make needed capital investments with the proceeds. When development rights are purchased, the land is permanently restricted through a conservation easement. PDR programs are often funded by a variety of taxes including property, sales, real estate transfer and special purpose taxes as well as through general obligation bonds.
Fee Purchase
Cash purchase at the fair market value is generally the preferred option for most landowners selling property or conservation easements to public entities. While in many instances obtaining cash payment yields the greatest return to the landowner, capital gains and other taxes may significantly reduce net return and make other types of transactions more attractive.
Bargain Sale
A bargain sale is a combination gift and sale of a property to a governmental or nonprofit entity. The landowner receives the benefit of both cash income and a charitable gift deduction for the difference between the fair market value and the bargain price. |
