Conservation Tax Provisions making their way through Congress

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Last year, Congress extended the deductions landowners can take for conservation easement donations in the Farm Bill. The provisions originally passed in the Pension Protection Act in 2006, but are set to expire at the end of this year. Representatives Mike Thompson (D-CA) and Eric Cantor (R-VA) are the lead sponsors of legislation, H.R. 1831 - Conservation Easement Incentive Act of 2009, that will permanently authorize the conservation tax incentives, the Act, which was introduced March 31, 2009 with 98 co-sponsors. Senators Baucus and Grassley introduced companion Senate bill S.812 - Rural Heritage Conservation Extension Act on April 2, 2009 as well.

Conservation easements allow landowners to permanently retire development rights to protect significant natural resources and open space. The current legislation allows landowners to deduct up to 50% of their AGI, while farmers and ranchers are eligible to claim up to 100%. Donors can take these deductions for 15 years. By placing a premium on the donation of easements, these tax incentives bolster voluntary land conservation while protecting the livelihood of our nation’s farmers and ranchers. The U.S. has seen a boom in voluntary conservation easements since the passage of this legislation- data indicates over a half million acres a year from 2003-2007. Over 50 leading conservation, sportsmen’s and agricultural organizations (including National Cattlemen’s Beef Association and the National Association of Conservation Districts) endorse the Conservation Easement Incentive Act.

By making these benefits permanent, it will allow time for the education and outreach necessary to build awareness and acceptance of conservation easements, and provide legal certainty for those involved in these long term projects. Implementing a conservation easement can take up to four years to complete with all of the various steps a landowner and the land trust or government entity must go through. With the current limits, there is just not enough time to complete the many worthy projects out there.

Of utmost importance, the conservation tax incentives stimulate an industry that delivers significant public benefits. Agricultural producers not only provide the food we eat, but open space, wildlife habitat, and potentially carbon sequestration. This legislation provides an incentive to low income farmers to keep working lands productive, on the tax rolls, and intact in the face of development pressures. It also provides incentive to middle income landowners allowing them to realize the same deductions that higher income landowners can take for the same donation.

Additionally, new bills are being introduced to provide estate tax deferments for farms, ranches and forest landowners.

New conservation tax provisions are giving farm and ranch landowners a competitive advantage for the first time to keep their land in agriculture and hold development pressures at arm’s length.

For decades, farms and ranches have become housing developments and ranchettes because conservation has not translated into dollars and cents. These new provisions are providing significant market penetration for conservation easements on agricultural lands from the Rocky Mountains west to California and Washington, across the Midwestern farm belt and throughout the Southeastern states.