Tax Benefits for Land Conservation

Two major actions regarding tax benefits for conservation efforts occurred at the state and federal level over the past month.

On May 25th, 2011, United States Representatives Jim Gerlach (R-PA) and Mike Thompson (D-CA), along with 251 additional sponsors, introduced the Conservation Easement Incentive Act of 2011 (H.R. 1964). This bill would make permanent the enhanced tax deduction for conservation easement donations, which would otherwise expire at the end of this year.

The enhanced deductions are available for contributions of qualified conservation property by individuals and by certain corporate farmers and ranchers. For individuals, an individual’s aggregate qualified conservation contribution is allowed up to the excess of 50% of the taxpayer’s contribution base over the amount of all other allowable charitable contributions. (IRS Code Section 170(b)(1)). Excess amounts may be carried forward and treated as charitable contributions for the ensuing 15 years.

At the state level, on May 11th, 2011, Georgia Governor Nathan Deal signed HB 346 into law, which allows a taxpayer with unused land conservation tax credits to transfer those credits, under certain conditions, to another Georgia taxpayer.

Georgia awards tax credits for the qualified donation of real property for conservation purposes, which credit is limited to an amount “not to exceed the lesser of $500,000.00, 25 percent of the fair market value of the donated real property as fair market value is established for the year in which the donation occurred, or 25 percent of the difference between the fair market value and the amount paid to the donor if the donation is effected by a sale of property for less than fair market value as established for the year in which the donation occurred.” O.C.G.A. § 48-7-29.12.

Georgia is now the fifth state that allows for the transfer of land conservation tax credits, joining Colorado, Virginia, South Carolina and New Mexico. Georgia’s provision becomes effective January 1, 2012.

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