Landowners can now deduct 50% of adjusted gross income
(up to 100% for farmers) for 2012/2013 Conservation Easements
Congress extended the tax deductions for conservation easements through the provisions of the American Taxpayer Relief Act of 2012. Included was a section for enhanced deductions for contributions of property for conservation purposes. Donors of conservation easements (and bargain sales) in 2012 and 2013 can now deduct up to 50% of their adjusted gross income (100% for farmers with 50% in agricultural income) over a total of 16 years. This is in contrast to the previous limits of 30% of adjusted gross income for a total of 6 years. These provisions do not apply to gifts of property in fee, gifts of a donor’s entire interest in a piece of land, or for gifts of an undivided interest in a piece of land. These gifts would still qualify under the 30% of adjusted gross income and 5 years of carryover.
In addition the Act reinstates and extends until the end of 2013 the IRA charitable rollover opportunity previously available through the end of 2011. The Act permits direct charitable rollovers by taxpayers 70½ or older of up to $100,000 from traditional and Roth IRA accounts to certain charities other than private foundations and donor-advised funds. In order to take advantage of this opportunity for 2012, you must make the distribution by February 2013. This technique allows donors to avoid income tax on charitable contributions that might otherwise be subject to deductibility limits, and it also might low inner a donor’s state income taxes in certain states.
If you have ever considered buying property with the thought of reducing your overall acquisition cost through the gift or bargain sale of a conservation easement, now might be the perfect time to do so. Additionally, LandVest is able to give property owners guidance in structuring the best easements to protect the value of your property. There are numerous other provisions that can impact an individual’s planning for acquisitions and dispositions that can be of benefit as well. We urge our clients to speak with their financial advisors to investigate how the provisions may impact them.
For additional information and examples of how the conservation provisions affect taxpayers, you can visit the Land Trust Alliance Web Site.
LandVest works with clients to help facilitate conservation easements throughout the United States. Recent projects in California, Colorado, Massachusetts, New York and Maine demonstrate our broad experience and expertise in this important sector of natural resource investments and stewardship.