Tax Benefits and Credits
Numerous benefits are available to landowners who make gifts of land or a conservation easement to Legacy Land Trust. The first of these is the satisfaction that comes from preserving special open spaces. Whether a farm, ranch or forest, wetlands or uplands, these lands will continue to support myriad rare plants and wild animals, and will be enjoyed by people for years to come. Aside from this conservation benefit, there may be financial incentives available to the landowner in the form of tax deductions and credits. The following is a general listing of potential tax benefits. All landowners considering a land conservation donation should consult a tax attorney or accountant for more complete information.

Federal Tax Benefits and Colorado State Tax Credits
Gifts of land or conservation easements to a qualifying organization such as Legacy Land Trust may qualify as a charitable deduction from annual adjusted gross income. The amount of the deduction is determined by the appraised value of the gift. In the case of a gift of a conservation easement, the appraisal estimates the difference between the fair market value of the property without restrictions and the fair market value of the property with restrictions. Under the recently updated Internal Revenue Code, a taxpayer may take a deduction of the fair market value of the donated easement up to 50% of his or her adjusted gross income for this type of contribution. Any amount donated in excess of this limitation may be carried forward for an additional 15 years subject to the same limitation in each of those years. Those who earn over one-half of their income from farming or ranching may qualify for a 100% deduction.

Beginning in 2007, the Colorado State Income Tax Credit for the donation of a conservation easement will allow a 50% credit up to a $750,000 donation (a $375,000 maximum credit per easement). The donor has 20 years to extinguish the credit or sell the credit to another entity. All of the credits from the conservation easement must be sold or used before another conservation easement donated by the landowner can qualify for additional tax credits. A number of tax credit brokers are available to match sellers and buyers of tax credits. Legacy Land Trust maintains a list of tax credit brokers who have handled credits generated by our conservation easements.

For more information on the state tax credits, please refer to the Department of Revenue’s website.

See the Colorado Department of Revenue’s FYI #39
for up-to-date information on the Colorado State Income Tax Credit for the donation of a conservation easement. This document can be downloaded in PDF format from www.revenue.state.co.us.