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New law increases tax incentives for conservation

Southwest MT ranch scenes

Montana ranch scenes. Photos © Jim Steinberg, Wayne Mumford

 

Conservation easements...

...are voluntary agreements between a land trust or agency and a private landowner. These agreements typically restrict commercial development and potential housing subdivisions on the property. In essence, land trusts acquire, and then retire, development rights of the property. An independent appraisal determines the development value of the property.

Typically conservation easements allow farm and ranch activities to continue. In general, conservation easements help maintain working farms and ranches, protect water quality, protect wildlife habitat, preserve open space and retain the values that make Montana such an attractive place to live, work and recreate.

Widespread support
The conservation tax incentive package was supported by close to 40 national wildlife, sporting and conservation organizations. The concept for the conservation tax incentives originated in Montana over five years ago by the Montana Land Reliance managing directors Bill Long and Rock Ringling.

The Montana Association of Land Trusts, of which the Conservancy and Montana Land Reliance are members, is comprised of 11 private, nonprofit land trusts.

Montana land trusts have assisted private landowners in conserving over one million acres in the state since the early 1980s.

Landowners have until Dec. 31, 2007

...to take advantage of new conservation incentives

A new federal law signed by President Bush August 17 offers conservation tax incentives that will enhance the opportunity for more Montana farm and ranch families to conserve agricultural lands in the state.

The bill, co-authored and sponsored by Montana Senator Max Baucus, was incorporated into the Pension Protection Act of 2006.

Key provisions related to conservation tax incentives:
* The bill raises the maximum federal income tax deduction a donor can take for donating a conservation easement from 30 percent of their adjusted gross income in any year to 50 percent.

* The bill allows qualified farmers and ranchers (income 51 percent or more from agriculture) to deduct (federal income taxes) up to 100 percent of their adjusted gross income.

* The bill increases the number of years over which a conservation easement donor can take federal income tax deductions from six years to 16 years.

* The bill increases the federal income tax deduction of individuals operating as a C Corporation from 10 percent to 50 percent. Many family farms and ranches in Montana operate as a C Corporation.

* The bill sets higher standards for appraisers and appraisals of all donated property to further curb appraisal abuse, and includes stiffer federal penalties for appraisal abuse.

Passage of these conservation incentives will allow more traditional Montana ranch families to protect their ranch heritage.

More information about conservation easements