Senate Approves Conservation Tax Incentives for Landowners

April 9, 2003, Washington, DC. The U.S. Senate passed conservation tax incentives today as part of a bill to aid charities. The CARE bill (S 476) includes four such incentives – one for landowners who donate conservation easements on their lands, one for landowners who sell their land to a conservation organization, one allowing nonprofits to use tax-exempt bonds for conservation of forests, and one exempting conservation grants from the U.S. Department of Interior's Partners in Wildlife Program from taxation. The bill will need to be approved by the House of Representatives before it becomes law.

"These incentives will help farmers, ranchers, and other landowners who want to protect their land from development," noted Land Trust Alliance (LTA) President Rand Wentworth. "The Senate recognizes that private, voluntary land conservation offers the best hope for protecting the American landscape. These new tax benefits will dramatically increase the number of landowners who will choose to conserve their land."

The Land Trust Alliance gave special recognition to Senators Charles Grassley (R-IA) and Max Baucus (D-MT), who co-sponsored the legislation, and to President George W. Bush, who made a campaign promise to support conservation tax incentives and has included it in each of his budgets. "Senators Grassley and Baucus, and President Bush, have led the way for a new generation of conservation incentives for private landowners," noted Mr. Wentworth.

Section 106 of the CARE package allows landowners who donate a conservation easement to a nonprofit organization or government agency ( permanently limiting the amount of development ( to deduct the value of their gift over 16 years rather than the six years previously permitted. The bill also increases the amount that can be deducted in any one year from the current 30 percent of the donor's income to 50 percent, with provisions allowing farmers and ranchers to deduct all of their income under certain circumstances. In no case can the deduction exceed the appraised value of the gift.

Under present law, landowners who donated a conservation easement were limited to deducting just 30 percent of their adjusted gross income in any year, for a maximum of six years. That meant if a landowner earned $50,000 annually – rather typical for America's farmers and ranchers – and donated an easement worth $1 million, the landowner could only deduct $15,000 in any year, up to a maximum of $90,000.

"The law needed to be changed to give a fair incentive to people giving extraordinary donations that were worth many times their annual income," stressed LTA Public Policy Director Russ Shay. "It only makes sense to allow ranchers, farmers and other middle income landowners to get an incentive in proportion to the value of their gift, rather than to the size of their income."

Conservation easements are contracts that retire development rights from a piece of land to serve a public conservation purpose. The landowner continues to own the land, and can continue to farm or ranch the property.

Section 107 of the CARE bill would cut capital gains tax by 25 percent on sales of land or of conservation easements to a conservation charity or government agency. It is modeled on the 50 percent exclusion proposed by President Bush in his budget.

Section 108 of the CARE bill would exclude from taxation grants to landowners from the Department of Interior's Partners for Fish and Wildlife program, which shares in the cost of improving wildlife habitat on private lands.

The managers' amendment to the bill also included a provision setting up a pilot program under which up to $2 billion in tax-exempt bonds could be issued by nonprofit organizations to purchase land for conservation, with the bonds repaid by renewable resource use on the land.

"In making a decision to protect their lands, landowners can give their communities a never-ending gift," said Mr. Wentworth. "Congress is making it possible for more landowners to do this, and it is a wonderful contribution to conservation of the American landscape."

The Land Trust Alliance, founded in 1982, is the nation's leading authority on private, voluntary land conservation. It represents more than 1,250 nonprofit land trusts that have protected more than 6.2 million acres of open space across the country. Headquartered in Washington, DC, LTA has regional offices in Portage, MI (Midwest Program), Saratoga Springs, NY (Northeast Program), Seattle, WA (Northeast Program), Durham, NC (Southeast Program) and Grand Junction, CO (Southwest Program). For more information about LTA, go to www.lta.org.