We are excited to announce that Congress recently passed legislation to permanently enhance the federal income tax deduction for the donation of a conservation easement. The new law allows conservation easement donors to deduct their donation at the rate of 50 percent of their Adjusted Gross Income (AGI) per year, and they can carry forward any excess contribution for as many as 15 years. Further, a qualified farmer can deduct their easement donation at the rate of 100 percent of AGI per year, potentially paying no federal income tax for the next 15 years.
“Now is a great time to think about conserving your land,” says Mike Kane, director of land conservation for The Piedmont Environmental Council. “This new law will allow landowners from a wide range of economic backgrounds to benefit from the tax incentives associated with an easement donation.”
PEC worked closely with other land trusts across the country and our partners in Washington, D.C. to make this incentive a reality. “This is the single greatest legislative action in decades to support land conservation. It states, unequivocally, that we as a nation treasure our lands and must conserve their many benefits for all future generations,” says Rand Wentworth, President for Land Trust Alliance.
In addition to the permanently expanded federal income tax deduction, conservation easement donors in Virginia are eligible for a Land Preservation Tax Credit that is equal to 40 percent of the value of their donation. Further, if the landowner doesn’t have enough income to use all the available credit themselves, they can sell excess credits to other Virginia income tax payers. The Land Preservation Tax Credit is one of the most generous state level conservation incentives in the country, and it’s had a dramatic impact on the pace of land conservation in the state since it was first enacted by the General Assembly in 2000.
While most landowners are motivated primarily by the desire to see their property protected for future generations, these financial incentives are also an important part of their decision making process. “We hope this encourages an acceleration in land conservation. Our conserved lands provide a lot of what makes this region beautiful and special, and they’re vital for the farming, forestry and tourism sectors that serve as the Commonwealth’s economic backbone,” says Kane.
Conservation easements are private, voluntary agreements that permanently protect rural conservation values such as farming, forestry, wildlife habitat, clean air and water, and scenic views. Easements do this primarily by limiting the amount of subdivision and development that is allowed on the protected property. Landowners retain their rights for rural uses such as farming, forestry and hunting. Conserved land can be leased and sold, and the new owners are subject to the conservation restrictions put in place by the original owner who preserved the land with an easement. In Virginia, there are many different state agencies and private conservation organizations that hold easements, and landowners can choose the one that is best suited for their property. Like private land, property protected with a conservation easement remains on county tax rolls, supporting local public services.
The permanence of the enhanced federal deduction coupled with the ongoing Virginia Land Preservation Tax Credit makes it a great time to consider protecting land with a conservation easement. In our region alone, more than 387,000 acres are permanently conserved. These lands are key to environmental protection— helping reduce sprawl, cutting down on impervious surfaces, and providing cleaner streams and cleaner drinking water supplies.
This article was written for our 2016 Land Conservation Update >>