By Eve Capehart
When farmers and other landowners put conservation easements on their Virginia property, they may receive Virginia tax credits for 40% of the easement’s value. (The value of a conservation easement is the difference between the land’s value with all its development rights and its value after an easement restricts the property’s development rights. The restrictions of the easement are in perpetuity). Landowners must obtain a detailed easement appraisal on their land and submit that appraisal to the Virginia Department of Taxation to qualify for a Land Preservation Tax Credit. Many landowners sell tax credits they cannot use to other Virginia taxpayers. If the landowner sells his/her credits themselves, the usual cost to a Virginia taxpayer is $.82 to $.85 per $1 of tax credit.
The taxpayer who buys the credits receives a letter from the Virginia Department of Taxation indicating the amount of tax credit they have bought. They may use this credit to pay all or part of their state income-tax bill. This letter is submitted with the tax return. For example, if you owed $2,000 for your Virginia state tax, you could buy $2,000 of tax credits from A landowner for $1,700 thereby saving $300 on your state tax and helping the landowner who put his/her land under a conservation easement. Some landowners sell their tax credits to an intermediary broker (a tax credit broker) who then handles the sale of their tax credits to the public.
Individuals and companies can buy and use up to $100,000 in tax credits each year. You must buy your tax credits by December 31, 2008 to use them for your 2008 taxes. You can buy your tax credits anytime during the year. To buy credits directly from individual landowners or to obtain broker information, you may contact land trusts such as the New River Land Trust in Blacksburg at (540) 951-1704 or nrlt@newriverlandtrust.org for more information.
Save both dollars and land-buy a Land Preservation Tax Credit. All Virginia residents benefit from protection of the state’s open spaces, farmland, forests and wildlife habitat.
PDF: Farmland Information Center: Status Of State Pace Programs - June 2008
PDF: Farmland Information Center: Status Of State Pace Programs - Sept. 2008