Donated vs. Purchased Development Rights
A Comparison
| Donated Development Rights | Purchased Development Rights (PDR) | |
|---|---|---|
| What is it? | The landowner protects their property with a conservation agreement. The value they give up by protecting their land is quantified and taken as a tax deduction. | The landowner protects their property with a conservation agreement. They are paid all or some of the value of their development rights. |
| How common is it? | Very common. The majority of the transactions the Conservancy has done in the past four decades have been donated development rights (also referred to as donated conservation agreements). | Rare. While Washtenaw County has a number of programs that do PDR, including the Legacy Land Conservancy, there are often strict criteria for what parcels can qualify. PDR is a highly competitive process. |
| Does money change hands? | No. The transaction is simpler because it does not involve cash changing hands. | Yes. The Conservancy pays the landowner for all or some of the value of the development rights. |
| Am I taxed on this transaction? | No. In fact, you may get a federal income tax deduction for the value of your donation. | Yes. Income from PDR is subject to capital gains tax. (The exception to this is if a PDR recipient does not take cash but immediately rolls. |
| Do I get a tax deduction for it? | Yes. If you choose to, you can document the value of your development rights and may get a federal income tax deduction for those rights. | No. If you accept payment of the full value of your development rights, there is no tax deduction involved. However, the difference between the full value of your development rights and the price you accept is considered donated value and eligible for a tax deduction. |
| Are there other tax benefits? | Yes. Property and estate tax benefits may apply. Learn more. | Yes. Property and estate tax benefits may apply. Learn more. |
View the Development Rights PDF.
