Tax Law benefits expanded through 2007

From 1991 to 2005, The Land Conservancy of McHenry County (TLC) protected about 285 acres of private land in the county by working with landowners, communities and developers. By the close of 2006, that number had reached nearly 700 acres, and is poised to double again in 2007.

The diversity of land TLC is protecting these days is growing as well. Until recently I think most people saw TLC as a group that preserved wetlands and other undevelopable properties, but this is changing. In 2006, we preserved nearly 300 acres of prime farmland, through two different easements; this land would have been developed with hundreds of homes. In both cases, the landowners chose not to sell for development. They chose conservation as their legacies instead.

A new federal tax incentive for donations of conservation easements, enacted in August 2006 and providing special adjustments to help farmers and ranchers, is expected to prompt more large-scale conservation. But the benefits expire at the end of 2007, so time if of the essence!

To refresh your memory: A conservation easement is a legal restriction which a property owner may place on his or her land to limit the type and amount of development that may take place on the property. People grant conservation easements to protect their land, historic buildings or scenic values from inappropriate development while retaining private ownership. The owner conveys the right to enforce those restrictions to a qualified recipient such as a land trust, a public agency, or a historic preservation organization.

The opportunity that Congress presented to landowners through the end of 2007 will make it much more attractive for private landowners of even modest means to benefit from the donation of conservation easements on the land they love.

The new law:
▪ Raises the deduction a landowner can take for donating a conservation easement from 30 percent of their taxable income in any year to 50 percent;
▪ Allows qualifying farmers to deduct up to 100% of their taxable income under certain circumstances; and
▪ Increases the carry-forward of any unused deduction amount from 5 years to 15.

Unless extended, these provisions will apply only to conservation easements donated in 2006 and 2007.

Any landowner wishing to take advantage of this remarkable benefit may request further information from The Land Conservancy of McHenry County, PO Box 352, Woodstock, IL 60098, or contact me directly at lhaderlein@conservemc.org, or 815.337.9502 ext 13.

Potential donors are urged to get advice from an experienced tax professional on how the benefits might apply in their specific situations.