Landowners that donate conservation easements may be eligible for Federal and State tax benefits. Both the Federal government and New York State have policies that encourage landowners to donate conservation easements to protect their land. In return for conserving land that provides a public benefit, the landowner may qualify for a Federal and State income tax deduction and/or the New York State Conservation Easement Tax Credit. Landowners who have donated conservation easements on their land may also benefit from reduced estate taxes.
Federal and State Income Tax Benefits
The donation of a “qualified” conservation easement to a “qualified” organization or agency is considered a charitable gift by the IRS and may be taken as a federal and state income tax deduction. The amount of the gift is determined by a qualified appraiser.
New York State Conservation Easement Tax Credit
Property owners with a qualified (donated or partially donated) permanent conservation easement on their land can get an annual, refundable State income tax credit equal to 25% of the combined town, county, and school taxes paid on their land (exclusive of buildings and structures) during the previous tax year. This credit is capped at $5,000 per year, and is transferable to the next landowner.
Estate Tax Benefits
Conservation easements can be utilized to reduce the fair market value of a property by restricting the amount and type of development that may occur. This reduction in the fair market value of the property also reduces the value of the estate for estate tax purposes. These incentives may lower or eliminate the estate taxes on a property and allow land to remain in the family rather than being sold to pay estate taxes. These are especially relevant incentives for farmers and landowners that are “land rich” and “cash poor.”
If you are interested in learning more about Tax Incentives, please contact us at (845) 677-3002.