Info for Landowners :
Tax Incentives

FEDERAL TAX INCENTIVES


2008 Note: Both the House and the Senate have passed measures to extend the tax incentives, and chances are good that it will become law. 

In August of 2006, Congress and the President passed a new law that significantly expanded the federal tax incentive for conservation easement donations.

The new law:

  • Raises the deduction a donor can take for donating a conservation easement from 30 percent of the adjusted gross income in any year to 50 percent
  • Allows qualifying farmers and ranchers to deduct up to 100 percent of their adjusted gross income
  • Extends the carry forward period for a donor to take tax deductions for a voluntary conservation easement from 5 to 15 years

For example, under the previous law, a landowner earning $50,000 a year who donated a $1 million conservation easement could take a $15,000 deduction for the year of the donation and then for an additional 5 years- a total of $90,000 in deductions.

Under the new law, that landowner would be able to deduct $25,000 for the year of the donation and then for an additional 15 years- for a total of $400,000 in deductions. If that landowner qualified as a farmer or rancher, he could take a maximum of $800,000 in deductions for his million dollar gift.

This law is only in effect through the end of 2007 (see 2008 note above).

STATE TAX CREDITS

South Carolina offers tax credits to those who make a donation of land for conservation.  In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar.

South Carolina’s tax incentive comes in the form of a tax credit equal to 25% of the fair market value of the conservation gift. The tax credit is limited to a maximum of $52,000 per year, and to $250 per acre. The South Carolina tax incentive allows the landowner to carry the unused portion of the credit forward indefinitely until the full credit is claimed. The South Carolina conservation easement tax credit applies in addition to federal tax benefits.

For more information, please read the South Carolina Department of Revenue's third edition of the Local, State, and Federal Tax Incentives for Conservation Easements: http://www.sctax.org/NR/rdonlyres/2CC8B3D0-B026-4739-833C-656A941DF100/0/coneas.pdf

Also, South Carolina is one of only two states where tax credits can be bought or sold on the open market.  Please visit http://www.conservesc.com/ for more information on buying and selling tax credits.