In the closing days of 2012, Congressional action, in the midst of discussions on avoiding a fiscal cliff, renewed the enhanced tax incentives for donations of conservation easements made in 2012 and 2013.
A conservation easement is a donation of certain rights in property to a qualified non-profit land trust with permanent restrictions as to its use. The donor continues to own the property subject to the restrictions the donor and land trust have agreed are necessary. Typically, the conservation values of the land, either as open space, farm fields, forest, wetlands or animal habitat are identified and the owner is allowed to continue to use the property in ways that do not interfere with the conservation values being preserved.
The value of the donation is determined with an appraisal of the property before it has a conservation restriction and after it has a conservation restriction. The reduced value is the donation amount. With the Congress renewal, 2012 and 2013 donors can deduct 50{002f3a62ed5e808149bf28bcaa2d37c27af8bb67782254068890d388cb02c96f} of their adjusted gross income for such a donation. More importantly, the carry over provision for conservation easement donations was continued. Donors can carry over contributions in excess of adjusted gross income for up to 15 additional years.
Conservation easements not only benefit donors with very significant tax deduction advantages, but they benefit the general public by preserving open space and natural habitats in perpetuity. This win-win is scheduled to expire December 31, 2013. Land owners considering such a donation will want to act before a possible change in incentive. Contacting your local land trust and an attorney experienced in conservation restrictions are the first step to tax savings and environmental preservation.
