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Tax Incentives for Private Land Conservation

Land Trust Alliance Recommendations to President-Elect Barack Obama December 8, 2008

Over the past several years, Congress has explored a number of innovative, high-leverage tax incentives for land conservation.  They include:

  1. Make permanent the enhanced federal deduction for donations of conservation easements to protect important natural resources on private lands.  Endorsed on the Sportsmen for Obama website and championed by Senators Max Baucus (D-MT) and Chuck Grassley (R-IA) and Representatives Mike Thompson (D-CA) and Dave Camp (R-MI), this incentive rewards agricultural and other modest-income landowners who received little incentive under prior law.  It was enacted by Congress in 2006, extended in 2008, and is now due to expire in 2009.  It has been a major factor in land trusts adding more than 2 million acres of new conservation easements in 2006-2007, 500,000 acres more than were conserved in the two years prior to its enactment. To be effectively marketed to private landowners, it needs to be made a permanent part of the tax code.
  2. Enhance the estate tax exclusion for permanently conserved lands (IRC 2031(c)).  Congressmen Earl Blumenauer (D-OR) and Timothy Bishop (D-NY) have proposed providing an increased exclusion or deferral of estate taxes, for permanently conserved lands.
  3. Provide new financing tools for private and public land conservation.  In 2008, Congress provided authority for the use of tax-credit bonds to acquire lands.  This enabled a 320,000 acre land acquisition in Montana, at least half of which will be added to the National Forest System.  Several members of Congress have also proposed providing authority for conservation nonprofits to use tax-exempt bonds to acquire forest lands that, though subject to timber harvest, would be permanently protected from conversion to other uses.
  4. Provide tax credits to landowners who voluntarily improve the habitat of imperiled species on their lands.  Senators Baucus, Grassley, Stabenow and Lincoln proposed such credits in 2007, along with Congressman Thompson.
  5. Reduce capital gains taxes on sales of land to public or private conservation agencies. 
  6. Provide tax credits to finance acquisition of conservation easements by conservation nonprofits.  At least three states (VA, CO and NM) provide transferable state income tax credits to donors of conservation easements, to partially compensate them for their donations. They have been an extremely effective incentive for conservation by landowners.  Senator Johnny Isakson (R-GA) has introduced legislation to provide such a tax credit on the federal level.

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Advocates Alerts

July 10: House Vote on Conservation Tax Incentive Coming Soon

The House of Representatives will vote on the Conservation Easement Incentive Act, perhaps as early as next week. Whether you use this incentive or not, this is an unprecedented opportunity for the entire House of Representatives to vote specifically on whether or not to help land trusts. Every vote will count, and we urge you to call your congressional office and ask your representative to support H.R. 2807 when it comes to the floor – and to get as many others as possible in your land trust and its local partners to do the same.
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