New! Iowa tax credit for
contributions of land for conservation

Thanks to new legislation passed in 2008, Iowa taxpayers can now claim a substantial Iowa tax credit when they donate to a qualified conservation organization:

Land for conservation purposes (full value or bargain sale), or
Conservation easements.

How much credit can I receive?

50% of the fair market value of the donated property interest
Maxiumum tax credit of $100,000

In other words, if you donate land or easements valued at $200,000, you can subtract $100,000 from your Iowa income tax payment.

Tax credit vs itemized deduction

Tax credits are generally much more valuable than tax deductions, but many people don't fully understand the difference.

A Tax Credit is subtracted directly from the tax you owe - dollar for dollar.
An Itemized Deduction reduces the amount of income on which your tax is calculated. Its value depends upon your income tax bracket.

SEE comparisons>

What if my tax credit is more than the state income tax I owe this year?

Any credit that exceeds your Iowa income tax liability for the tax year of the donation may be credited to next year. And this "carry-over" can be claimed for up to 20 years or until the full tax credit for your donation is claimed — whichever is earlier.

What if my donation is worth more than $200,000?

A donation valued at $200,000 would give you the maximum tax credit of $100,000. If your donation exceeds $200,000, you can claim an Iowa itemized deduction for the remaining value. SEE EXAMPLES.

How is this new tax credit different?

You used to be able to claim an itemized deduction on both your state and federal income taxes for your donation of land for conservation. Now you can claim a state tax credit, which greatly increases your state tax savings. Plus you can still claim your itemized federal deduction for a conservation-related donation. For more information on federal tax incentives available for conservation-related donations, see the Land Trust Alliance website.

What kind of land donation qualifies for this tax credit?

Donation must be in land in Iowa
Donation must be made in 2008 tax year or later
Must be "conveyed as an unconditional charitable donation in perpetuity to a qualified organization exclusively for conservation purposes." See references to codes and rules.These definitions align with the federal IRS rules for donating land or land value for conservation.

What if my donated land is not owned solely by me as an individual?

An individual may claim the credit for donating land that was held in partnership, a limited liability company, S corporation, or an estate or trust electing to have the income taxed directly to the individual. The amount you can claim is based on your pro-rata share of your earnings of the partnership, limited liability company, S corporation or estate or trust.

How to claim the tax credit?

Use the Form IA 148 "Tax Credits Schedule."
Attach a copy of Federal Form 8283 'Noncash Charitable Contributions" which shows how you calculated the value of your donation. (You'll attach this same form to your federal tax return to claim your federal itemized deduction.)
You'll need a qualified appraisal to claim a tax credit or deduction on a donation valued at more than $5,000. The appraisal date needs to be within 90 days before or after the date you sign the deed or easement. SEE EXAMPLES.

NOTE: If you claim more than one kind of tax credit, you need to deduct the tax credits in a particular sequence.

For more information

Related links on the Iowa income tax credit for contributions of conservation land, effective for the 2008 tax year:

More information on tax issues:
Income taxes | Capital gains taxes | Estate & inheritance taxes | Property taxes | Cautions

This factsheet is provided for information only. Always consult your attorney or tax advisor for legal or professional advice for your situation.

This information released October 2008, Iowa Natural Heritage Foundation

New! Iowa tax credit for contributions of land for conservation

New! Iowa tax credit for
contributions of land for conservation