Think of a special piece of property. Maybe it’s a plot of land you own that is situated perfectly adjacent to the Spokane River. Maybe it’s a charming house or commercial building in downtown Spokane. Maybe it’s a vineyard or precious wooded area. If your ultimate goal is to protect that piece of property and preserve it in its current condition, there are several planning strategies to consider that might incidentally also yield some compelling tax deductions.

Start with the ultimate goal: protecting the piece of property in its current condition. Those strategies are premised on that singular goal. The strategies aren't to better utilize the property or make the property more productive. And the strategies are not intended to necessarily maximize your return either.

Focusing on one of the above examples, let’s say that you own a home next to a vineyard, and your main goal is for the vineyard to remain a vineyard for as long as possible. What can you do? Here are some options, in no particular order and not to the exclusion of other options.

1. Donate the land to a charity that has your same values.

If the goal is to preserve the vineyard in this example, then you, as the donor, can seek out a charitable entity—corporation or trust—that has the stated purpose of preserving vineyard or farm property in its current condition.

Once found, do a little due diligence to feel comfortable that the charity is going to do the thing that you want: preserve the vineyard. Once comfortable with the potential recipient of the property, you get an appraisal for the value of the property to be donated and donate it to the charity.

You might then be able to use the donation as a charitable deduction on your tax return based on the value of the property as appraised. The appraisal must generally meet the relevant requirements of certain U.S. Treasury regulations.

As a reminder, the donor gets two benefits: nonrecognition of the gain—meaning that if you instead sold it, you may have to pay capital gains on the sale; and a potential deduction for the fair market value of the property contributed to the charity—assuming the charity is a qualified nonprofit.

2. Gift a conservation easement to an entity—likely a charity—that maintains the character of property.

Instead of gifting the entirety of the property to a charity, you could gift a piece of the property to a charity. A “bundle of sticks” is the metaphor to help understand property rights. A person can give away one stick or a few sticks from the bundle of sticks and still maintain meaningful ownership.

In this case, you will give an easement that would place a conservation restriction on the entire property. The easement typically would be given to a qualified charity with the express purpose of maintaining the character or purpose of the property right that you are donating. In essence, you are giving away the right to change the character of the property. Such a gift has value, too. You are donating a right, the value of which is generally the difference between the value of the property if the owner could make changes, and the value of the property if the owner can’t make changes.

Using the example above, we return to the vineyard. The owner could donate a conservation easement and the value of the easement then might be the difference between the highest and best use of the property—perhaps commercial property for wineries or gift shops—and the value of the existing vineyard. The difference is the value of the gift and the corresponding deduction for tax purposes. The same kind of appraisal as above would be required.

3. Retain a restriction on the sale or gift of property.

If the owner wanted to sell the vineyard but also have assurance that the character of the property remains unchanged, the owner could choose to convey the land by deed but retain an enforceable right that the property never be used for any other purpose other than a vineyard. This kind of conveyance would likely reduce the sale price of the property and it would not result in any tax deduction, but it could be effective in preserving the character of the vineyard.

4. Place the property into a trust.

A trust, in general terms, is a vehicle that adds controls to the use and/or distribution of property. Here, the trust would be established to preserve the character of the property in perpetuity. Well, not exactly into perpetuity; Washington only allows trusts to last for 150 years. Here, the owner again would not be entitled to any income tax deduction. But there is the possibility that the owner could use this trust as an effective estate tax mitigation technique.

 Beau Ruff is an attorney and director of planning at Cornerstone Wealth Strategies Inc., in Kennewick, Washington.