Summary of the federal legislation that was passed, increasing the deductions for easement donations & extending the number of years over which a landowner gets to stretch the value of the donation.

If you know any farmers who have ever thought about donating the development rights on their land, now is the time - the window will only be open until the end of 2007!  And for qualified farmers, the deduction is 100% of Adjusted Gross Income for 16 years (if they need it).

Conservation Tax Incentives Fact Sheet

Adjusted Deduction for Conservation Easement Donations Will Help Farmers and Ranchers

Section 1206 of the pensions bill (HR 4) recently passed by Congress will help family farmers, ranchers, and other moderate-income landowners get a significant tax benefit for making the extraordinarily valuable donation of a conservation easement, restricting future development of their land to protect a resource important to the public.  Most such donations are made to local, community-based charities dedicated to keeping land in agriculture, conserving important wildlife habitats, and protecting important open space and historic resources.  This proposal will:

• Raise the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%;
• Allow qualifying farmers and ranchers to deduct up to 100% of their AGI; and
• Increase the number of years over which a donor can take deductions from 6 years to 16 years.

This provision would be effective for donations made from January 1, 2006 through December 31, 2007.  After that, the law would revert back to previous provisions, unless Congress extends the provision prior to the deadline.

Conservation Incentive Combined with Solid Tax Reforms

Section 1219 of the bill sets higher standards for appraisers and appraisals of all donated property, and sets higher penalties for abusive appraisals.  Conservationists support this to ensure the integrity of the charitable donation process.  Section 1213 tightens restrictions on donations of easements to protect historic buildings.