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New bill gives major tax
breaks for land conservation Leah Justice
August 28, 2006, TryonDailyBulletin.com
People who put their land in conservation easements this year and next year can get major tax breaks for the next 15 years. On Aug. 17, President George W. Bush signed into law H.R. 4, which expands federal tax incentives for conservation easement donors. The bill can be especially beneficial to farmers and ranchers as well as people owning historic properties. The expanded tax incentive raises the deduction a donor can take for donating a conservation easement from 30 percent of their adjusted gross income in any year to 50 percent of their income. The incentive allows qualifying farmers and ranchers to deduct up to 100 percent of their income and it increases the number of years to take deductions from the previous six years to 16 years. Local agricultural officials say local farmers could essentially pay no taxes on income by conserving large amounts of land. “For farmers and ranchers, this is huge,” said Sandra Reid of the Polk County Soil and Water District. “Farmers could zero their income for the next 15 years and be tax free.” Reid says her office and PAC will be glad to steer landowners wishing to participate in the right direction for the incentive. An example from http://conserveland.org says that under the previous rules, a landowner earning $50,000 a year who donated a $1 million conservation easement could take a $15,000 deduction for the year of the donation and for an additional five years, for a total deduction of $90,000. Under the new rules that landowner can deduct $25,000 for the year of the donation and then for an additional 15 years, for a total deduction of $400,000 for the same $1 million property. If the landowner qualifies as a farmer or rancher, they can zero out their taxes, and they could take a maximum of $800,000 in deductions for their million dollar gift. According to the website conserveland.org, the new law applies to all easements donated from Jan. 1, 2006 until Dec. 31, 2007. Peter Shanahan, who organized a group to coordinate local land conservation efforts, says the new federal tax incentives exemplify a widening recognition that conserving open spaces and trails is an important public good. “With the rapid rate of development in our area of late, the enhanced tax benefits are a very welcome added incentive,” said Shanahan. PAC officials say they are excited about the incentive as well. “PAC is very excited about these new tax incentives for land preservation, and has already started on a two-year plan to maximize the benefits for our Foothills area,” says Renee McDermott, PAC board member. She adds that PAC plans to work towards an extension of the two-year period the incentives are initially expected to be in effect. “We are pleased, excited and challenged about the expansion of the federal tax incentive for conservation easement donations,” said PAC Executive Director Sally Walker. The great challenge now for PAC and the community, Walker says, is to rally landowners into action during the two years before the deadline. “The urgency involved is a blessing, however,” Walker said, “because PAC’s land committee is operating under what it considers a ‘land emergence’ to preserve enough natural resource area and greenspace to balance out the intense level of development coming to our area.” Section 1206 of the pensions bill (HR 4) passed by Congress recently extends tax benefits to moderate income landowners and farmers in exchange for donating land to a conservation easement which restricts future development of their land to protect it as a resource. Polk County has made efforts this year as well to give farmers more incentive to protect their land from development by enacting a voluntary ordinance giving other tax breaks for farmland in conservation.
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