Tax Benefits

Tax Benefits of Giving a Conservation Restriction (sometimes called a Conservation Easement)

The rights a property owner relinquishes, and those that are retained, are set forth in the conservation restriction.  This restriction is transferred permanently to a qualified conservation organization such as The Belmont Land Trust.  When the document is signed and recorded, the property’s current and future owners can no longer exercise the rights that have been given up.  Those rights have a financial value.  To determine that value, an appraisal is commissioned by the landowner.  This appraisal must be performed in accordance with guidelines stipulated by the Internal Revenue Service and approved by the organization that will hold the restriction.  The advice of a tax attorney or accountant is necessary to determine the specific tax benefits, but generally, the following will apply:

Federal and State Income Tax Benefits

Under the IRS code, the value of the donation of a qualified conservation restriction can be deducted at an amount up to 50% (up from 30%) of the donor’s adjusted gross income less the value of all other charitable contributions in the tax year of the gift.  If the restriction’s value exceeds 50% of the donor’s income, the excess can be carried forward and deducted over all or part of the next 15 years (up from 5 years*).

Generally, a Massachusetts taxpayer will also be entitled to receive, beginning in 2011, a state income tax credit for 50% of the fair market value of a donation of land or a conservation restriction thereon, up to an amount of $50,000, if it has been determined by the Secretary of Environmental Affairs to be in the public interest.

Property Tax Benefits

A permanent conservation restriction may reduce or stabilize property taxes, depending on current zoning and land use and current assessed value.

Estate Tax Benefits

The donation of a conservation restriction, whether during the landowner’s life or by bequest, can reduce the value of the land upon which estate taxes are calculated.  This benefit can often mean the difference between heirs having to sell or develop the property to pay estate taxes, or being able to keep the property in the family.  A conservation restriction may be an effective way to pass land on to the next generation in its natural state.