There are significant tax benefits available to property owners who enter into a voluntary land protection agreement, known as a “conservation easement,” with the Cacapon and Lost Rivers Land Trust. This includes:
Federal Income Tax Deduction
The value of a conservation easement is calculated by subtracting the fair market value of the property with the easement restrictions in place, from the fair market value of the property without easement restrictions.
The IRS provides a deduction under the “Charitable Contribution” regulations for donations of property interests, which includes conservation easements. You will file IRS form 8283 to qualify for this deduction. Expenses associated with the placement of the easement are also deductible.
The total federal income tax deduction is limited to 50% of your adjusted gross income. The deduction can be used the year of the donation and carried forward for fifteen additional years. Qualifying farmers and ranchers who earn more than 50% of their income from farming would be able to deduct 100% of their income.
Federal Estate Tax Exclusion
For the purposes of calculating estate taxes, a conservation easement donated during your lifetime can reduce the value of your property and therefore, reduce the value of your taxable assets.
Additionally, the IRS allows you to exclude up to 40% of the value of your property, if a conservation easement is in place, from the calculation of your assets. Heirs who donate a post-mortem conservation easement can also receive a deduction for the amount of the conservation easement value over and above the 40% exclusion described above.
* The Trust strongly suggests professional guidance when making accounting and estate planning decisions. For more specific IRS information about the new tax law, you and your accountant or attorney should visit Land Trust Alliance’s website at www.lta.org.