Living in a border town surrounded by abundant natural lands, Saultites know Americans frequently cross the bridge to come enjoy the Canadian wilderness.
They also know those Americans often own land here in Canada, sometimes with the land having been passed down generation after generation.
Because many of those American-owned lands are important to conservation efforts in Canada, a unique American charity works to help American landowners transfer their properties to Canadian conservation groups to preserve the lands’ wildlife and natural habitats — and without having to pay hefty Canadian tax bills.
American Friends of Canadian Conservation has operated since 2007 with the goal of protecting Canada’s natural heritage by helping American owners of Canadian lands navigate their way through the complicated legal and tax requirements that come with being cross-border landowners.
“They often don’t know that they’re Canadian taxpayers and they can’t just give the land to their kids,” Sandra Tassel, American Friends program coordinator, told Sault This Week.
“We’ve had people come, ready to donate their property, and find out they have a whopping tax bill because they didn’t know they had to pay capital gains in Canada when they got it from their parents.”
Recognizing that American-owned lands are key conservation properties in many land trust catchment areas in Ontario, the Ontario Trillium Foundation has provided funding over three years to American Friends and Ontario Land Trust Alliance to launch the Cross-border Conservation Training Program (CCTP) in 2016.
The goal is to increase the collective capacity of Ontario conservation organizations to be successful at “cross-border conservation” – to secure high-priority conservation properties owned wholly or partly by US taxpayers – and to bring more funding to support such work. We envision offering training opportunities in the form of workshops and one-on-one mentoring. CCTP also has funds for mapping, communications resources, and a small grants program to assist OLTA members with the costs of initiating cross-border conservation gifts.
Rainy Lake Conservancy, Georgian Bay Land Trust, Lake Superior Watershed Conservancy, Magnetawan Watershed Land Trust and The Bruce Trail Conservancy have all partnered with AF to secure one or more of these cross-border conservation gifts. In Ontario, 12 cross-border gifts combine to protect over 800 acres since 2011. US income tax benefits made these gifts financially feasible for the owners, many of whom have passed their Canadian properties down through generations. The total appraised value of these gifts is over $6 million USD.
The Old Man Creek Preserve was saved from subdivision and development by an American who acquired the land and donated it to American Friends of Canadian Conservation in a transaction facilitated by the Magnetawan Watershed Land Trust.
Conservation organizations can help develop the program by completing this short, online survey.
Professional advisors and conservationists can gain more information and become involved by contacting:
Big news for conservation
Last week the US Congress gave a wonderful year end gift to preservation advocates, protection-oriented landowners and anyone who values natural, wild places. In a bi-partisan vote that reflects Americans’ interest in conservation, irrespective of their other political leanings, both the House and Senate voted to make the “Enhanced Conservation Easement Tax Incentive” permanent and retroactive to the beginning of 2015.
Here’s what that means to American Friends, its partners and US taxpayers who own ecologically-sensitive land, including in Canada.
What is the Conservation Tax Deduction?
The US conservation tax deduction allows a landowner to claim a federal income tax deduction for the value of a donated conservation easement that meets requirements of a qualified conservation contribution — similar to other charitable donations. The value of the conservation easement is generally calculated by determining the difference in property value before and after the conservation easement is registered on title. The landowner donated that amount by restricting the potential future uses of the protected land.
Without the enhanced incentive a landowner could only deduct the value of a conservation easement, up to 30% of his or her adjusted gross income (AGI), for up to six years. (The year of the gift, plus five years of carry forward.)
These former limits meant that taxpayers without high taxable incomes might not be able to fully utilize the charitable deduction associated with an easement gift. It was a serious disincentive for people of more modest means to donate conservation easements, especially in areas where property values have appreciated substantially and/or when a landowner wanted to preserve their land’s natural character by eliminating most or all development. The more future development the landowner foregoes the higher the appraised value of the easement, hence the tax incentive conundrum which has been addressed by the new legislation.
What is the Enhanced Incentive and How Does it Work?
The enhanced incentive raises both the AGI limit and the length of time over which donor can use the tax deductions. These modifications can make a big difference in the financial bottom-line produced by donating a conservation easement.
Landowners with modest incomes, or who donate conservation easements that are very valuable, will now be able to fully use their deductions and reduce their tax burden. Farmers and ranchers are eligible for even higher deduction allowances.
The specifics of the enhanced deduction:
- Raises the maximum deduction a donor can take for donating a qualified conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%.
- Allows qualified farmers and ranchers to deduct up to 100% of their AGI.
- Increases the number of years over which a donor can take deductions from a donation of a qualified conservation easement from 6 to 16 years.
The newly-approved incentives mean that voluntary land conservation will be even more attractive to US taxpayers who own ecologically important land in Canada; especially those who want to keep their land in their families and therefore need to reduce their Canadian capital gains. Donating a conservation easement to American Friends will decrease the current value of their land, making it less expensive to transfer the property to the next generation. The enhanced tax benefits will greatly improve the overall bottom-line by allowing donors to reduce their US taxes more significantly.
This change will help American Friends, its Canadian partners and the families from the US who are seeking a financially realistic way to retain the natural qualities of their properties. The incentive further leverages philanthropic and government funding to save Canada’s healthy watersheds, wildlife habitat, scenic views, recreational resources and economies based on cottage tourism, hunting and fishing.
Please contact Sandra Tassel, Program Coordinator, for more information about this exciting news. Phone (360) 515-7171 or firstname.lastname@example.org
St. John Point, a 64-acre waterfront property on Mayne Island, is going to be a new regional park in the Southern Gulf Islands of British Columbia, thanks to a unique collaboration.
At the southwest tip of Mayne Island, St. John Point features 1.3 miles of pristine shoreline complete with beaches, a series of dramatic coastal bluffs connected by meandering trails through mature Douglas Fir forest, a prime remnant of a rare Salish Sea ecological zone, and extensive eelgrass beds. Located near the international border, Mayne Island is served by the BC Ferries system, making it accessible for low-impact, oceanfront recreation.
Learn about the St. John Point transaction in these videos.
Conservationists, local governments and Southern Gulf Island residents are celebrating a new regional park.
Their successful fundraising campaign has allowed for the purchase of 26 hectares on Mayne Island known as St. John Point.
“Together we have assured the protection of this magnificent stretch of Coastal Douglas Fir landscape and over two kilometres of coastline,” said Malcolm Inglis, president of the Mayne Island Conservancy, in a news release.
By Alison Howson, Executive Director of the Ontario Land Trust Alliance
Conservation is all about people. Our activities threaten habitat for all species. On the other hand, our passion for nature provides the inspiration for preservation. We are cause and cure. Land trusts provide knowledge and support to people who are inspired to act on behalf of nature, and future generations.
The Ontario Land Trust Alliance (OLTA) strengthens land conservation in Ontario by building and supporting a strong land trust community. We ensure that conservation organizations have the knowledge and tools to be effective.
Three years ago, OLTA and American Friends launched the Cross-border Conservation Training Program (CCTP) to increase land trusts’ capacity to protect ecologically significant, and potentially threatened, properties owned by US taxpayers. In recognition of the potential land protection outcomes, the Ontario Trillium Foundation provided the key funding. The McLean Foundation also invested in the CCTP. We are extremely grateful for this support which brought our project to life.
Educating landowners from the US about differences between our two countries’ capital gains tax regimes is a critical conservation strategy. In Canada, capital gains results from almost all transfers of appreciated real estate; including bequests. Under the US system which uses an estate tax instead, only the very wealthiest Americans have to worry. As a consequence, Americans often don’t make any special estate arrangements for their Canadian property; opting to “…just give it to the kids.”
The Canadian tax on such a gift can be as much as 25% of the property’s appreciation. Where property values have escalated sharply, the tax quickly adds up to six figures. Unless the current owners set aside funds, their heirs may have to sell some or all of the property for development in order to pay the tax.
This is why OLTA and American Friends are helping Canadian land trusts provide guidance and support to US landowners and their professional advisors.
Happily there are tax incentives in both the US and Canada to promote permanent protection of Canada’s natural heritage. Unfortunately, this fact is not widely known. Through the CCTP, OLTA and American Friends are providing materials to share this information with US owners of priority parcels in Ontario. Tax benefits can make it financially feasible for US owners to act on their passion to protect their favorite places. We are proud to report that CCTP has created innovative new tools, built land trust capacity and helped advance the protection of thousands of acres of environmentally sensitive lands owned by US taxpayers.
Beauvais Point, on Wolfe Island, is a perfect example. Located in the Thousand Islands region of the St. Lawrence River, very close to where it originates in Lake Ontario, Wolfe Island’s forests have almost all been cut to create farmland. The majority of the shore is divided into second home lots for vacationers who can swiftly reach Wolfe Island via a short ferry trip.
Thanks to the multi-generational stewardship of the MacLean family, Beauvais Point is the exception, with an impressive forest, on rich, dark soil. Visitors are struck by the unusually lofty canopy height of the straight, tall shagbark hickories and maples. The extensive waterfront is mostly natural. These features protect habitat for migratory birds and rare plants, and maintain the clear water and clean river bottom that species like small and largemouth bass and muskellunge require for reproduction.
Burton (Mackie) MacLean and his wife Charlotte, who live in Pennsylvania, were searching for a realistic way to pass Beauvais Point to their adult children and ensure that their large crew of grandchildren would be able to experience the river, the woods, and the company of their extended family. To achieve that vision, they needed a conservation approach to reduce Canadian taxes and produce a US income deduction. The CCTP helped make that possible.
Last year, Mackie and Charlotte donated perpetual conservation easement to American Friends in a transaction facilitated by Thousand Islands Watershed Land Trust (TIWLT). Beauvais Point cannot be subdivided and new structures are allowed only in the areas around existing buildings. A CCTP workshop for landowners, hosted by TIWLT, helped inform the MacLeans of their options. The CCTP also provided essential funds for transaction costs associated with the easement gift.
This year, as part of the CCTP program, the MacLeans welcomed dozens of other American landowners to Beauvais Point to share their story, and showed off the natural features of the property to inspire other families to follow their lead.
Together, OLTA and American Friends look forward to all the important future land conservation in Ontario that is resulting from our program and partnerships.
When Sam White’s heirs donated a conservation easement over Echo Island to American Friends of Canadian Conservation, they and the Rainy Lake Conservancy (RLC) completed a multi-year journey and reached a preservation milestone. Because this gift was the first of its kind in Ontario, the journey turned out to be a slow paddle rather than a fast ride in a speed boat! This is the story of how RLC, the donors and American Friends got there.
Everyone involved knew from the start there would be the legal equivalent of stormy waters as we developed an easement document acceptable to the Canadian Revenue Agency, the US Internal Revenue Service, and the Province. Fortunately we were a good paddling team and we arrived at our destination none the worse for wear. We, at RLC, are proud that we protected a rare piece of Ontario’s endangered White Pine habitat and charted a course for others who will embark on similar journeys to preserve special places in Ontario.
RLC works to conserve lands and waters treasured by Canadians and Americans. Our area includes the famous Boundary Waters Wilderness Canoe Area, Quetico Provincial Park, the Rainy Lake Islands Conservation Reserve and many other protected places.
A number of metaphorical shoals created by title issues, appraisal questions and government procedures slowed us down at times. Passion, patience and good humor kept us all going to the end.
Having survived our maiden voyage, we are now in the process of protecting 3 more properties on Rainy Lake with American Friends. It has been rewarding to work with such professionals. They are first and foremost individuals committed to conservation, a shared goal that drives land trusts to venture into uncharted waters!
For more information, contact Dale and Phyllis Callaghan, Rainy Lake Conservancy, email@example.com.
In the days before Christmas a landmark conservation gift permanently protected a significant coastal property known as Seven Days Work Cliff on the beautiful island of Grand Manan in the Bay of Fundy. The Nature Trust of New Brunswick (NTNB) and a US charity called American Friends of Canadian Land Trusts (American Friends) formed a unique partnership that made this “cross-border” donation of land in the province possible. Cross-border conservation conserves ecologically important Canadian land that is owned by preservation-minded Americans. At 23.8 hectares, Seven Days Work Cliff is best known for its spectacular sea cliffs that are home to birds of prey and a popular trail that overlooks the Bay.
“Much of the island’s coastline is privately owned and is being rapidly developed,” says Renata Woodward, Executive Director of NTNB. “The conservation of Seven Days Work Cliff means another natural area has been put aside for nature, as well as for residents of Grand Manan and visitors to enjoy for years to come.”
Located on the northeastern section of the island between Whale Cove and Ashburton Head, Seven Days Work Cliff consists of a highly visible and spectacular 80 metre sea cliff, as well as wetland and other natural vegetation. It is also an ideal place to see the birds of prey that nest and hunt along the cliff. The beloved cliff-top “Red Trail”, managed by the Grand Manan Trails Association and used by residents and visitors, also traverses the land.
“Grand Manan is a beautiful and environmentally fragile New Brunswick gem. Protecting its special landscapes is a high priority for NTNB, but land there is very expensive, especially if it has an ocean view,” says Woodward. “We are thrilled that the Americans who owned Seven Days Work Cliff wanted to conserve their property and were willing to donate it.”
NTNB formed the innovative partnership with American Friends to make this generous gift legally and financially feasible. American Friends now owns the donated property and NTNB will manage it as part of their network of nature preserves.
“Seven Days Work Cliff is a perfect demonstration of why Canadian land trusts created American Friends,” says Sandra Tassel, Program Coordinator for the Seattle-based organization. “Americans own priority conservation lands in many of Canada’s most scenic and ecologically sensitive places. We find that these landowners truly cherish their properties and are willing to give the land for preservation purposes if tax and legal obstacles can be overcome. The partnership between the Nature Trust and American Friends to protect Seven Days Work Cliff is a great example of what can be achieved through cross-border donations. We hope this will be the first of many New Brunswick projects.”
The features of the property inspired all of the parties involved in the pioneering project. The cliffs are a geological wonder, containing layers of rock formed during the enormous volcanic event that filled the Bay of Fundy with basaltic lava 201 million years ago. Today, the boulder-strewn beach below the cliffs attracts rock hounds who come to collect fine specimens of volcanic zeolites, quartz, jasper, agate and other minerals that fall from the cliff as it slowly erodes.
Seven Days Work Cliff is the 37th nature preserve managed by NTNB in the province and the third on Grand Manan.
Many generous contributions have been made to the project, including the land donors (who wish to remain anonymous), American Friends of Canadian Land Trusts, Davis Conservation Foundation, Grand Manan Trails Association, The William P Wharton Trust, EcoAction, and anonymous donors.