Tax Incentive for Conservation Easement Donations Improved

Congress has voted to make the enhanced tax incentive for conservation easement donations permanent, and the President has signed it into law.

Owning land provides many opportunities for both tax shelter and conservation, and one of those opportunities was recently improved. In December of 2015, Congress voted to make the enhanced tax incentive for conservation easement donations permanent, and the President signed it into law shortly thereafter.

Why is this important? Previously, the enhanced incentives were voted in for one-year periods, many times at the end of the applicable year, and applied retroactively, which made it difficult for landowners to implement an effective conservation easement before December 31^st. The new legislation allows landowners to have ample time to plan and structure their easements and also allows landowners of more moderate income levels to benefit from the tax advantages of donating a conservation easement.

Without the enhanced tax incentives, the annual deduction allowed for donating a conservation easement was limited to the total value of the donation or 30% of the landowner’s adjusted gross income, which could be used over a period of up to five years. Any amount of the donation value not used within that five years was expired and therefore lost. Now that the enhanced incentives have been made permanent, the annual deduction limit rises to 50% of adjusted gross income over a period of 15 years, creating opportunities for landowners with lower income levels to be able to utilize the full value of the deduction before it expires. For a landowner with an adjusted gross income of $250,000, that means an additional potential deduction of $50,000 per year for 15 years.

So if you’ve never looked into a conservation easement as part of your investment perspective, now is the time to start. Contact one of National Land Realty’s qualified Land Professionals to locate a tract that could be used to take advantage of this great opportunity to invest in conservation.

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* Disclaimer: This is not intended to be tax advice. Please consult your tax advisors before making financial decisions.

What is a Conservation Easement?

A conservation easement is a voluntary legal agreement between a landowner and a land trust or government agency that permanently limits uses of the land in order to protect its conservation values. [Source]