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Landowners Want to See Expired Tax Breaks for Land Conservation Reinstated and Made Permanent

Bill Clark/CQ Roll Call File Photo
Proponents of the tax deduction for landowners who donate property for conservation purposes are looking to Camp, as chairman of the House Ways and Means Committee, to make permanent the expired tax break.

Supporters of a generous federal tax deduction for landowners who, in essence, donate property for conservation or preservation are trying to persuade Congress to make the tax break permanent. First, though, they have to get it back on the books; it expired at the end of 2013.

These conservation, wildlife and agriculture groups had some allies on the Senate Finance Committee, but its members approved only a two-year renewal of the “enhanced” conservation easement deduction. They are hoping for better results from the House Ways and Means Committee, where Chairman Dave Camp, R-Mich., appears to be for the tax break, since he proposed to make it permanent in the tax platform he released in February.

The tax break applies to those who grant a government agency or a nonprofit such as a land trust a conservation or preservation easement for a piece of property. With the easement, the owner gives up the right to develop the land in the future, in return for a tax deduction for the lost market value of the land. The owner retains the title, though.

Backers of the tax break say that tax deductions for conservation easements have protected rural land from suburban and city sprawl and provided habitat for wildlife.

“Having that tax provision,” Dale Moore, policy director for the American Farm Bureau Federation, said, “is basically an incentive for farmers and ranchers to invest in a conservation practice that is going to have the co-benefit of helping to improve production on the land in all the ways that conservation does and at the same time there is a public good to it.”

The tax break that is in permanent law allows those donating easements to deduct up to 30 percent of their adjusted gross income, spread over 5 years. The “enhanced” provision that has expired allowed landowners to deduct up to 50 percent of their adjusted gross income for their donations. Qualified farmers and ranchers could deduct 100 percent of their adjusted gross income spread over 16 years.

Questions have been raised in the past about the loss of taxable income to the government versus measurable benefit to the public. In particular, the use of the tax break by golf course owners has drawn scrutiny with allegations that deductions claimed for the donated land value have been excessive in some cases.

The IRS and others also have raised concerns about preservation easements in which owners win tax deductions by promising not to make changes in a building, when the changes already are forbidden by local zoning laws or restrictions.

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