Gifts of land support community
One of your most valuable personal and financial assets provides the opportunity to leave a legacy in your community and support charities you care about most. More farmers are considering the opportunity to donate their land to charitable organizations.
Many reasons spur donations of land: None of your family is able to take over the farm operation; you are ready for a transition; you want to control how your land will be used in the future; or you’d like to support a charity in a unique way.
• More farmers are considering giving land to support local community charities.
• With land prices at record highs, gifting land makes big impact on a community.
• Iowa tax credits available if you gift land through local community foundation.
A recent report from the Iowa Farm and Land Chapter No. 2 Realtors Land Institute found a record increase in farmland values of 34.7% in the state for the 12 months ending Sept. 1. With land values at record highs, a gift of farmland can make a large and lasting impact in your community.
When you donate farmland you:
• receive the maximum income tax deduction allowed by law for charitable gifts
• remove appreciated assets from potential estate taxes
• bypass capital gains tax on appreciated assets
• attain personal financial goals while supporting favorite charitable causes
• attain a level of giving you may not have considered possible through an asset you already own
• preserve one of the greatest natural assets of Iowa — farmland. The gift remains locally owned.
You can choose to establish an income stream for yourself and continue to live on the farm by creating a life estate; you will receive a partial charitable income tax deduction.
Iowa community foundations, scattered across Iowa’s 99 counties, help donors give back to their communities by accepting gifts of land. Endow Iowa Tax Credits are available for farmers who gift their land through a community foundation to establish an endowment to benefit Iowa charities. Endow Iowa allows donors to receive a 25% Endow Iowa Tax Credit in addition to normal federal charitable income tax deductions.
When Russell Helms of Madrid, in central Iowa, donated 83 acres of land to the community foundation to benefit the Madrid Community Endowment Fund and the Madrid Historical Society, he said, “I hope this gift will inspire other farm and landowners to give and preserve their family’s history and heritage. This is an example of what people in our state can do to make a difference in their communities.”
Members of the Helms family have lived in the Madrid community for more than 160 years, and through this gift, the family’s presence will grow as they plant seeds of giving for future generations.
How this program works
The community foundation works with donors and their trusted financial advisers to make meaningful gifts and support charitable organizations.
• You identify the farmland you would like to give; an appraisal establishes estimated market value.
• You can establish a charitable fund in your name, in the name of your family or business, or in honor of any person or organization you choose. Then you decide what charities your fund will support.
• If you choose to endow your fund to ensure future support of the community, your gift will be invested over time. Earnings from your gift are used to make grants addressing community needs. Your gift and all future earnings from the gift are a permanent source of community capital.
• Your gift qualifies for a tax deduction based on its full market value, and you avoid the capital gains tax that would otherwise arise from the sale of the property.
• The community foundation handles all of the administrative details so you can focus on gaining a rewarding return on a major asset.
“With the appreciation of agricultural land, many landowners now have sufficient assets to leave a significant gift for charitable or community purposes, as well as provide for surviving family members,” says Ed Power, a professional adviser to the Community Foundation of Greater Des Moines. Current low interest rates have created a rare opportunity to maximize an individual’s tax benefits through a reserved life estate or charitable trust.
The question of how much to leave your family can also be an important issue. With low interest rates and high land values, it is now much easier to provide for heirs and also establish a perpetual family fund for charitable causes.
The Community Foundation of Greater Des Moines is a donor-driven public foundation whose purpose is to improve quality of life. If you would like more information about gifts of land, contact Sheila Kinman at 515-447-4207 or find your local community foundation at www.iowacommunityfoundations.org. The accompanying table provides an example of the tax savings and impact with a $1 million farmland gift.
Kinman is director of advancement for the Community Foundation of Greater Des Moines.
This article published in the December, 2011 edition of WALLACES FARMER.