"When we see land as a community to which we belong, we may begin to use it with love and respect." Aldo Leopold
(1886 - 1948) American Forester
New Tax Incentives
New Federal Law Gives Better Tax Break for Voluntary Conservation Agreements
Congress recently passed a law to enhance the tax benefits of protecting your land by donating a voluntary conservation agreement. If you own land with important natural or historic resources, donating a voluntary conservation agreement can be one of the smartest ways to conserve the land you love and protect America’s natural heritage, while maintaining your private property rights and possibly realizing significant federal tax benefits.
These new incentives make it easier for average Americans, including working family farmers and ranchers, to donate land. The legislation allows the following:
- A conservation agreement donor can deduct up to 50% of their adjusted gross income in any year;
- Qualifying farmers and ranchers can deduct up to 100% of their adjusted gross income; and
- Donors can carry over deductions for their contribution for as many as 15 years.
These changes allow many modest income landowners to deduct much more than they could under the old rules, bringing increased fairness to the tax code.
What do you need to know to enter into a voluntary conservation agreement? Here are the facts:
§ A voluntary conservation agreement, also known as a conservation easement, is a legal agreement between a landowner and a nonprofit land trust or government agency that permanently limits uses of the land in order to protect important conservation values. It allows you to continue to own and use your land and to sell it or pass it on to heirs.
§ When you enter into a voluntary conservation agreement with a land trust, you decide what can and can not be done with the land now and in the future. For example, you might restrict anyone from subdividing or building additional houses on your land, while retaining the full right to grow crops. Future owners also will be bound by the agreement’s terms. The land trust is responsible for making sure the terms of the agreement are followed.
§ Voluntary conservation agreements vary widely. Some agreements will protect rare wildlife habitat and prohibit any development. Other conservation agreement might allow continued farming and the construction of additional agricultural structures. Conservation agreements may apply to just a portion of a property. And public access is another variable with some agreements allowing for public access (often when government funding is involved) and some agreements that keep the land completely private.
§
A conservation donation requires not only a willing
donor, but a qualified conservation organization to
accept the donation. That organization needs to
be able to show that the donation closely fits its
particular charitable mission. A land trust will
not accept a donation that does not fit its mission and
purposes.
§
A voluntary conservation agreement can help a
landowner pass land on intact to the next generation.
By limiting the land's development
potential, the agreement lowers its market value, which in turn
lowers estate tax. Whether the agreement is
donated during life or by will, it can make a critical
difference in the heirs' ability to keep
the land intact.
§ If a conservation agreement benefits the public by permanently protecting important conservation resources and meets other federal tax code requirements, it can qualify as a tax-deductible charitable donation. The amount of the donation is the difference between the land's value with the agreement and its value without the agreement.
§
To qualify as a charitable donation, a conservation
agreement must be permanent. A landowner
should get professional financial planning
and legal advice before making such a major donation.
To learn more about protecting your land with a voluntary conservation agreement, call Mississippi Valley Conservancy’s Conservation Director, George Howe at 608-784-3606 ext. 2.