Action Center Home | Background | Successes and Accomplishments

Tax incentives for conservation - which enable landowners to make donations of land and easements - are essential to land trusts. There is a bill in Congress (S. 1780) that would expand the federal tax incentives for conservation donations. But Congress is also considering a rewrite to the tax law for conservation donations that could negatively impact land trusts, and January recommendations by Congress' Joint Committee on Taxation threatened to eliminate many of the tax benefits for conservation.

Current Law

U.S. tax law provides two tax incentives of particular interest to conservationists.

1) Charitable deduction for donations of real property. Landowners who donate their property to a land trust can take the fair market value of their land as income tax deduction, just as they could take a deduction for donating stock, works of art, real estate, or other items to any other 501(c)(3) charity. The deductions are subject to the same limitations as other charitable donations.

2) Charitable deduction for donations of qualified conservation easements. Landowners who donate conservation easements can also claim the fair market value of their easement donation as an income tax deduction. These deductions are subject to the limitations laid out in 26 USC 170(h). Learn more.

Threats to Conservation Tax Incentives

Joint Committee on Taxation Report

In January of 2005, the Joint Committee on Taxation issued a report that recommended severe limits to the deductions landowners can take for donating a conservation easement. The committee proposed that deductions for a conservation easement be limited to no more than 33% of the easement's appraised value, and that no deduction be allowed for an easement on a property used by the taxpayer as their personal residence.

More information on the JCT report:

• Fact Sheet (Word, 42KB)
• Excerpts from the JCT Proposal (PDF, 109KB)
• Complete JCT Proposal (PDF, 1.3MB)

Many of these proposals have been rejected by key lawmakers, thanks to timely and persuasive action by conservationists. However, changing the rules for conservation donations in the name of reforms still caries a significant risk of making land trusts' conservation work much harder.

Senate Finance Committee Reforms

In 2003, a series of articles in the Washington Post on conservation transactions led the Senate Finance Committee to undertake an investigation. In June of 2005, the Committee held a hearing on "the Tax Code and Land Conservation: Proposals for Reform". While specific reforms have yet to emerge from their work, the Committee clearly intends to change the rules for conservation donations.The details of their proposals will be very important to land trusts. The land trust community must continue to educate Finance Committee Senators, and all members of Congress, about their conservation work and its importnace to their communities.

New Tax Incentives

In September of 2005, Senators Rick Santorum (R-PA) and Joe Lieberman (D-CT) introduced a bill that included new tax incentives for conservation. The bill would provide moderate-income easement donors the opportunity to realize a greater tax benefit by allowing them to deduct a higher percentage of their income over a greater number of years. It would also provide a reduction in the capital gains tax for landowners who sell to conservation organizations. Learn more about the specifics of this legislation.

Conclusion

Land trusts, Land Trust Alliance, and our partners have had a great deal of success educating members of Congress and their staff. A number of key policymakers have spoken out against the JCT recommendations for land trusts. But reforms could move forward at any time, and it is important that people who care about conservation tax incentives make sure their lawmakers understand the value of private land conservation in your communities. Take action today.