US owners of ecologically significant properties in Canada can donate fee simple title or a conservation easement to American Friends and achieve their conservation and financial objectives. American Friends 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).
Before American Friends 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, through the EcoGifts Program, be protected from capital gains tax liability. (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 Overview of Potential Taxation Outcomes.
American Friends offers in depth information for US Donors, Landowner Advisors and Canadian Land Trusts in the Resources section of this website.