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I just inherited a couple hundred acres of pristine woodland in New England. I'm a nature-lover, so my first impulse is to keep the land as-is, letting campers, trekkers, and wildlife just use it as they like. But the taxes are killing me.

The taxes are so high that I think of either (a) giving it away to a conservation society (which would be unfortunate, because the land was bought by my great-great-grandfather and has been in the family since); or (b) logging the land, or somehow getting some money out of it to pay off (part of) the taxes.

Do you guys/gals have any creative suggestions on how I can manage this land without going bankrupt? I also thought of, for example, leasing it to a university.

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    What did your relative who you inherited from do with it? Was he/she very wealthy and chose to just pay taxes? You might want to verify that there isn't a trust that was established to pay these taxes by the previous previous owner or anything like that (which could also encumber the land). – Joe Jan 26 '15 at 16:02
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    Be careful, giving it away does not mean you won't owe taxes on it. In fact it might incur additional gift taxes that you'd have to pay. This actually raises an interesting question. Do you have to accept an inheritance? – JohnFx Jan 26 '15 at 17:53
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    Have you checked both the current appraisal value, and the zoning? You might check with the local government about whether it could be rezoned to reduce the taxes. – mkennedy Jan 26 '15 at 18:27
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    You might also look to see if there are any 'preservation area' rules in that state/county (eg, you declare 90% of it to be agriculturally preserved, and you can't ever build on it, but the assessed value can drop significantly if residential land values are high) – Joe Jan 27 '15 at 1:15
  • @JohnFx In PA you don't have to. One of the 3 major categories of blighted property my town's redevelopment authority has on it's chronic problem list are buildings (mostly houses) where the owner died and his/her heirs refuse to accept inheritance of it. – Dan Neely Jan 27 '15 at 5:33
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In some jurisdictions you can donate the development rights. You and the family still own it, but nothing can ever be built on it. In some cases you will still be able to build a cabin or similar structure on a few acres, but the bulk has to be left natural.

The advantage is that by giving away the logging or other development rights the land loses much of its value, thus reducing the tax value of the land. There are some hoops that you need to jump through, but this is not an unusual transaction.

Another choice it to see if the land touches any similar conservation areas. It can be possible to donate the land to the government or other conservation group, but it would revert to the family if they ever tried to sell or develop the land. Because you don't own it you would not have to pay taxes, but hikers, canoeists and campers could still use it. By donating the land to the same organization a your neighbors it can streamline the paperwork for people who want to through hike.

6

You could rent it out to hunters, or a charge a fee for camping on it. If you log it, you can often get Federal assistance in paying for replanting. You can also get certifications that your timber is being grown and harvested sustainably, making future timber more valuable, while minimizing the environmental impacts of harvesting on the property.

You also may be able to get mitigation credits for restoring and maintaining the land. The credits can be sold to developers in the same watershed to cover the taxes.

  • I would check out mylandplan.org – Bishop Jan 26 '15 at 18:29
  • Along these lines, you might be able to sell the land's carbon sequestration credit to polluters. – user13820 Jan 28 '15 at 14:40
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Two things come to mind: a conservation easement has been mentioned already and I think you might also want to look into a timber REIT (Real Estate Investment Trust). REITS are odd beasts, to be sure and the tax situation can be convoluted but it might meet your needs.

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Depending on your location, you might have a lot of options to choose from to mitigate your tax burden. There might even be a possibility of combining a few options to make a buck or two off of it.

As someone already mentioned, check out conservation easements and REITs, they can be great ways of relieving your burden. Another option that I know is available in a number of states is land-use tax qualifications that allow for significantly reduced tax rates based on the current zoning/use of the land as a timber area(You may not plan on harvesting the timber but you can potentially still qualify for the reduction).

Is the land appropriately assessed/appraised? Make sure you're not getting ripped off. What are your neighboring landholders paying for taxes? I would imagine most locales in and around New England would at least have GIS parcel maps in place, talk to your neighbors and find out what they do to minimize their costs. If all else fails, check out ParcelQuest or Google Earth Pro and find out the digs on others with similar land holdings. Make some cold calls, be polite, and ask. Many people, especially in the country are happy to oblige a friendly neighbor.

What would the definition of 'pristine' be? What is the age of the trees, furthermore, what type of trees comprise the woodland? Are you open to selective harvesting(which if done properly can actually improve the health of your property)?Check out what you can do with it(is your woodland comprised of sugar maple or some other resource that might be of persistent value?). Do you want to have the land for the sake of having it or do you want to do anything with it? If you're in a semi-urban environment you could converse with local hunting, disc-golf, or other groups that might be interested in utilizing the land. These uses could potentially be combined with a conservation easement to improve your outcome in more ways than one.

Keep in mind, often times with conservation easements, know everything you want out of the land in the long term. Once the ink is dry, the deal is done.

Take your time, think about it. Do what feels right.

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Look into:

"State forestry tax deferment plan providing a considerable reduction in property taxes."

"My property was in a “greenway”, which was supposedly county sponsored; but was really funded by the federal government and gave the property had a tax reduction."

There are also woodlot exemptions, iirc. Depending on the state, etc.

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