Be an ADVOCATE

Adjusted Deduction Helps Protect Important Resources

In 2006, Congress changed the tax incentive for voluntary conservation donations – donations by private landowners that retire development rights to protect significant natural and historic resources – including working farm and ranch lands.  Such donations protect up to 1 million acres a year – and the 2006 change is causing that figure to grow.

The 2006 change enables family farmers, ranchers, and other moderate-income landowners to get a significant tax benefit for donating a conservation easement on their land, which often was impossible under prior law. 

That opens the door to voluntary, landowner-led conservation on millions of acres of land across the country.  Many such donations are made to local, community-based charities dedicated to keeping land in agriculture, conserving important wildlife habitats, and protecting important open space and historic resources.  The incentive also enhances “bargain sales” of easements purchased by local, state and federal conservation agencies.1

The 2006 law expired at the end of 2007, but section 12203 of the Senate’s Farm Bill would reinstate it, re-establishing this cost-effective conservation tool.        

How It Works

The 2006 law:

• Raised the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%;
• Allowed qualified farmers and ranchers to deduct up to 100% of their AGI; and
• Increased the number of years over which a donor can take deductions from 6 years to 16 years.

Under prior law, an agricultural landowner earning $50,000 a year who donated a conservation easement worth $1 million could take a total of no more than $90,000 in tax deductions!  Under the new law, that landowner can take as much as $800,000 in tax deductions – still less than the full value of their donation, but a significant increase.

Conservation Incentive and Solid Tax Reform

The 2006 law also set higher standards for appraisers and appraisals of all donated property, and set higher penalties for abusive appraisals.  Conservationists supported this to ensure the integrity of the charitable donation process.  The law also tightened restrictions on donations of easements to protect historic buildings.  These reforms did not expire at the end of last year.

Widespread Support

Passage of the 2006 law was supported by a wide variety of organizations, including:

One of the best ways to show your support for these provisions in the Farm Bill is to cosponsor stand alone legislation making the new easement incentive permanent.

Senators Max Baucus (D-MT) and Charles Grassley (R-IA) introduced legislation (S. 469) to make the new easement incentive permanent.  That bill has a bipartisan list of 27 other sponsors from all parts of the country. To cosponsor S. 469, contact:

Jonathan Selib
Office of Senator Max Baucus
202-224-0515
           
The President’s 2009 budget endorses an identical provision, which it scores as costing $245 million over ten years.  The Joint Committee on Taxation has scored these bills as costing $761 million over ten years.

Questions? Contact Sean Robertson at the Land Trust Alliance: 202-638-4725 x319

1.  A “bargain sale” is the sale of property to a charity or government agency for less than its full fair market value.

updated 2/15/08