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Tax Benefits of Conservation

Economic Benefits of Donating Conservation Lands or Conservation Easements: There are several economic benefits of placing a conservation easement on your property. Some of these benefits are listed below. You are advised to consult an attorney and a financial advisor/estate planner concerning these programs.

North Carolina Income Tax Credits: The landowner may apply for a state conservation tax credit on lands put under easement. A landowner may receive a tax credit up to 25 percent of the value of the donated interest in the land (up to a maximum credit of $250,000 for individuals and $500,000 for corporations). The credit may be carried for five succeeding years on their state income taxes until it is used up.

Federal Income Tax Deductions: A landowner may claim a federal tax deduction for donating a conservation easement on his or her land. The value of the easement is considered a charitable contribution that may be deducted from federal income taxes by attaching a Form 8283 to an income tax return. The federal tax deduction can be used against 50% of the landowner’s adjusted gross income, and can be carried forward for 15 consecutive years up to the full value of the value of the easement. This provision applies to donations of conservation easements closed from January 1 2008 to December 31 2009.  For more information on the newly expanded federal tax incentives for conservation easements, click here.

Federal Estate Tax Deductions: Landowners may also use the value of the donated conservation easement against their estate taxes. For estates valued at more than $650,000 (for 1999) where land is the major asset, this tax deduction can lead to a major reduction or elimination of estate taxes. Additional estate tax savings provisions are available under I.R.C. 2031(c) that afford additional tax relief with land under conservation easements (up to $200,000 for 1999). See your financial advisor for more details.

County Tax Reductions: Although every county has a different taxing system, some county property tax relief may be expected for the portion of land under conservation easement. The conversion from open land to forest in perpetuity may reduce the taxable fair market value of the land. Landowners should contact their local tax office for more details.