Tax plan boosts
conservation tool

This article was written and posted on INHF's website in June 2001. 

WASHINGTON -- One of the nation's frequently used tools for protecting land from development is being expanded under a provision of the tax law President Bush signed this week.

People can now donate conservation easements anywhere in the United States to a land trust or government agency after their death and qualify for an estate tax benefit.

The tax law eliminates a requirement that a qualifying conservation
easement be within 25 miles of a metropolitan area, national park or wilderness area or within 10 miles of a national forest that is near a big city.

That requirement had left ineligible much of rural America, including areas of the Great Plains and parts of 44 states such as northern Maine and north-central Pennsylvania.

Interior Secretary Gale Norton, the nation's chief steward of public
lands, said Friday the new law "helps more families contribute a legacy of conservation and environmental protection that will live on for generations."

Helen Hooper, congressional affairs director for the Nature Conservancy, said the new provisions would make a big difference.

"People who are going to pay an estate tax will now have an incentive to put a conservation easement on their land," she said. "It'll be a good incentive for people who are elderly."

Russell Shay, public policy director for the Land Trust Alliance, said
the new provisions represent a modest advancement by making a
conservation tool available to more people.

"Extending these conservation easement benefits will make more
landowners eligible to get a benefit for donating development rights," he said. "It may be a modest advance for land conservation, but it really is a matter of fairness."

The pre-existing benefit lets donors and heirs cut estate taxes by up to 40 percent of the value of land covered by a conservation easement. But that 40 percent cannot exceed $400,000 this year or $500,000 next year.

The new provisions apply to estates of people who died after Dec. 31, 2000.

About 1,200 land trusts exist in the United States. Along with
government agencies, they help protect several million acres under conservation easements across the nation.

An easement has permanent restrictions on use or development of land, although restrictions can vary depending on the land, state law and the protecting group.

Rather than risk having to sell or develop land to pay costly estate
taxes, a person can lower the value and retain the land for heirs by
deeding development rights to a land trust or government agency through a conservation easement.

Normally, the Internal Revenue Service would tax a farm not on its value for agriculture but at the price a developer would pay for it as a site for a subdivision. By permanently donating those development rights to a land trust, the farmer's land would be valued as a farm.

Conservation easements generally are granted if they adhere to IRS regulations and provide some public benefit for outdoor recreation or public education, protect open space or the natural habitats of fish, wildlife and plants, or preserve historic land or buildings.

Bush also wants to allow a 50 percent capital gains tax exclusion for private landowners who voluntarily sell land or water to a land trust or government agency for conservation. Congress has not acted on the idea, however, and its prospects are uncertain.

State and local governments have committed more than $17.5 billion toward buying land and conservation easements in the past three years, according to the Land Trust Alliance, which promotes private land conservation work.

For more information, e-mail Cathy Engstrom, director of communications, or call (515) 288-1846.

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