The Return of the Conservation Tax Incentives

By Thomas Hall, Braun & Gresham Attorney & Counselor

By Thomas Hall, Braun & Gresham Attorney & Counselor

On July 17, the U.S. House of Representatives passed the “America Gives More Act,” a package of five changes to the tax code, with a bipartisan majority vote of 277-130.  The bill includes a provision to permanently reinstate the federal income tax incentives for donations of conservation easements on private land which expired at the end of last year.

Texas landowners have preserved millions of acres of land using conservation easements. A landowner can use a conservation easement to protect the land they love from subdivision and development, as well as to preserve agricultural land and sensitive natural areas. Another benefit to a conservation easement is a reduction or elimination of federal estate tax.  The landowner in essence donates the development rights on their land, usually to a non-profit conservation land trust, which holds them in perpetuity while allowing the landowners to continue to own and enjoy their land. Landowners can sell it, subject to the conservation easement, or pass the protected land down to future generations to create a legacy.

The donation of a conservation easement allows the landowner to receive a federal income tax deduction for the gift.  The Act allows farmers and ranchers to offset 100% of their adjusted gross income with conservation donations, potentially zeroing out their tax liability. A landowner who is not agricultural producer can wipe out 50% or more of their federal income tax bill.  If there is more deduction than a taxpayer can use in one year, the Act permits the taxpayer to carry forward any unused write-off for up to 15 more years.

Of course, this Act still needs to get senate approval and they might reshape these conservation incentives because they are estimated to increase the federal deficit by $1.777 billion over then next 10 years. It is unlikely that this legislation is going to barrel through Congress to the President’s desk before the November elections.

Stay tuned for further information.

To learn more about conservation easements, CLICK HERE.

1 Comment

  1. Star Carey
    July 25, 2014

    Please let us know what the senate does.

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