US owners of ecologically significant properties in Canada can donate fee simple title or a conservation easement to American Friends of Canadian Conservation and achieve their conservation and financial objectives. American Friends of Canadian Conservation is able to provide the ideal tax outcome for donors who are US taxpayers by providing both a US income tax benefit (through its designation as publicly supported 501(c)(3) US charitable organization) and relief from Canadian capital gains tax (through its designation as a Prescribed Donee under the Canadian Income Tax Act regulations). Refer to Save Some Green: a handbook for U.S. taxpayers for a complete explanation on bi-national tax incentives for Canadian conservation.
Before American Friends of Canadian Conservation was created, charitably inclined US taxpayers who wished to protect land they owned in Canada faced an unpleasant choice:
– Give the property, or property interest, to a Canadian land trust or government agency and reduce or eliminate Canadian capital gains tax on the gift. (In Canada, gifts of appreciated property can result in capital gains tax even if the donor receives no money.) The gift would not be eligible for US income tax deductions, and if it was an easement might not qualify for estate tax benefits either.
– Give the property, or property interest, to a US charity (if one would accept the donation) in order to take advantage of potential US income and estate tax deductions. However, Canada taxes gifts of real estate as though the property were sold outright, unless the recipient is a Canadian charity. Therefore the donor would likely be liable for Canadian capital gains tax, which can substantial if the property is highly appreciated.
For more information on potential tax outcomes of cross-border gifts please refer to the Fact Sheet for Potential Donors and Fact Sheet for Landowner Advisors.
American Friends of Canadian Conservation offers in depth information for US landowners, tax and legal advisors, and Canadian conservation entities in the Resources section of this website.