Easement incentives increased by Congress

By Joe Albert Staff Writer

Washington — Things didn’t look good for conservation easements
in late 2004 and early 2005.

After a series of articles in the Washington Post created a
furor surrounding easements, a joint congressional committee made a
recommendation that lawmakers should eliminate the tax breaks given
to landowners who donate easements.

But rather than doing away with them, a bill recently passed by
Congress and signed by President Bush – the Pension Protection Act
of 2006 – includes increased incentives for the donation of
permanent easements.

“From a national perspective, this is the most important
incentive to be passed by Congress in 20 years in helping family
farmers and ranchers protect their land,” said Mary Pope Hutson, of
the Land Trust Alliance.

The result, she said, will be “more easements, hundreds of
thousands of additional protected acres for wildlife …”

The incentives apply to those landowners who donate conservation
easements, not those who sell them. It would include any easement
donated as of Jan. 1 of this year through the end of 2007.

Once the bill is signed, it will raise the maximum deduction
donors can take from 30 percent to 50 percent of their adjusted
gross income; allow qualifying farmers and ranchers to deduct up to
100 percent of the adjusted gross income; and increase from five
years to 15 years the time during which donors can take the tax
deduction.

For example: if a landowner donates a $1 million easement and
earns $50,000 a year, he could deduct $25,000 in the year of the
donation, and another $25,000 each year for the next 15 years.
Under the old law, he would have deducted $15,000 in the year of
the donation, and another $15,000 for each of the next five
years.

The bill also tightens the rules for the appraisal of donated
property, and landowners still cannot deduct more than the fair
market value of the land.

“The whole purpose is twofold,” said Tom Landwehr, of The Nature
Conservation. “One is to be more fair to landowners who make
donations that have a large conservation value, and second is to,
frankly, make it more attractive for people to do that.”

The Land Trust Alliance and The Nature Conservancy were two of
more than 30 groups that worked to increase incentives. Others
included Ducks Unlimited, the Theodore Roosevelt Conservation
Partnership, and the Association of Fish and Wildlife Agencies.

The widespread support was the result of the panel’s
recommendation to do away with tax breaks for easements, and
rhetoric from powerful politicians that “scared the conservation
community half to death,” said Terry Riley, vice president of
policy for TRCP. “It looked like they were going to take away a lot
of the tax benefits.”

The increased dollar amount that landowners can write off, along
with the extended timeframe in which to do it, allows them to
capture more of the capital gains they lose by donating the
easement, rather than selling it for development or subdividing it,
Riley said.

The tax breaks apply only to those easements that are donated,
not to those easements purchased as part of programs such as the
Conservation Reserve Program.

The number of purchased easements – in dollars and acres – is
much higher than the number of donated easements, Landwehr
said.

“(For) large operations still in grass, this would be a real
attractive program for a group like DU, or us for that matter, to
conserve prairie by donating easements,” Landwehr said.

It also could have applications as part of an effort to conserve
large blocks of forest.

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