Voluntary
donations of qualified conservation easements may be eligible for a
charitable deduction from state and federal income taxes. When a
landowner donates a conservation easement and extinguishes certain
development rights, those rights have a monetary value. The value of
the development rights must be determined by a qualified appraiser.
The appraiser essentially completes two appraisals. The first
appraisal calculates the full market value of the property
(retaining all development and subdivision rights). The second
appraisal determines the value of the property with the limits set
forth in the conservation easement (limited development and
subdivision rights). The difference in these two appraisals
constitutes the value of the conservation easement gift. In order
to qualify for a federal income tax deduction, the land involved
must meet certain IRS conservation criteria to establish a public
benefit, such as scenic enjoyment by the general public,
preservation of natural ecosystems or historic sites, or public
education or recreation.
On December 31,
2009, incentives that enhanced the tax benefits for protecting your
land by donating a conservation easement expired. The former rules
for donating a conservation easement are currently in effect:
·
Maximum annual deduction that you can take for donating a
conservation easement is 30% of your adjusted gross income (AGI).
Under the enhanced incentives, the maximum
was raised to 50% and was 100% for qualifying farmers and ranchers.
·The
total number of years over which you can take your deduction is six
years (the tax year of the donation plus five years carried
forward). Under the enhanced incentives,
the total number of years to take your deduction was increased to 16
years.
With the help of
the Land Trust Alliance, DLC is working to bring back the expired
enhanced incentives and make them permanent. The enhanced
incentives are vital to promoting land conservation and allow many
modest income landowners to deduct much more than they could under
the current rules, bringing increased fairness to the tax code.
If you are
interested in learning more about conservation tax incentives,
please contact us at (845) 677-3002.
This information
does not constitute legal or tax advice and DLC strongly recommends
that you discuss your land conservation options with legal and tax
professionals.
