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Laws for the Land
New Federal Tax Law Helps Families Preserve Their Properties
A small change in federal tax law is making conservation easements a lot more attractive to a lot more people. Thanks to the Pension Protection Act of 2006, landowners who donate conservation easements during 2007 can deduct up to 50 percent of their adjusted gross income and carry over unused portions of their tax deduction for up to 15 years (rising from 30 percent and five years).
Landowners who earn most of their income from ranching, farming or forestry can deduct as much as 100 percent, up to the assessed value of the easement. There are also increased tax benefits for corporations.
The change from five years to 15 is especially helpful, says Jeff Knoop, who directs the Conservancy’s land-protection efforts in Michigan’s Upper Peninsula. “It gives people enough time to reap the full tax benefit of their donation.”
Among those benefiting are Constance and Diana Sherry. Knoop has been helping the sisters put an easement on their beloved family camp on Michigan’s Net River. The 58-acre property consists of two forested lots, purchased by the sisters’ father with the wages he earned as a soldier in World War II.
For the Sherry sisters, the new law made the difference between donating two separate easements six years apart—to try to maximize the tax benefits—and completing one simple transaction that keeps the two lots together. “We would have done an easement regardless,” says Diana. “But I’m happier now, because I know it’s done for the entire property exactly the way we want it.”
—Danielle S. Furlich
The Pension Protection Act of 2006 provides other benefits to charitable donors, including a two-year IRA Charitable Rollover provision. Donors aged 70 1/2 or older can exclude up to $100,000 from their gross income in tax year 2007 for cash gifts made directly to qualified charities.
Nature picture credits: Photos courtesy of the Sherry Family
