Tax Incentives

The donor of a qualifying conservation or historic preservation agreement (easement) may claim the value of the easement as a deduction for income, gift, and estate tax purposes and may be able to reduce real property taxes.  In order to qualify for tax reductions, a land protection agreement must meet federal and state tax code requirements- essentially by providing public benefit through permanent protection of important conservation or historic resources.  An easement does not, however, have to cover an entire property, nor preclude all use or development, nor allow public access to qualify.

To qualify as a charitable contribution for federal tax purposes, a conservation agreement must be perpetual and must:

	preserve of land for public outdoor recreation or education;
	protect relatively natural habitats of fish, wildlife, or plants;
	preserve open space including farm and forest land;
	preserve historically important land or buildings.

The potential tax advantages of an easement gift must be determined by the donor, assisted by legal counsel, a qualified appraiser, and by tax officials. 

Federal Tax Incentives
If the conservation agreement gift is made during the Donor's lifetime and the land is long-term capital gain property, the Donor may also claim an income tax deduction for the full fair market value of the easement.

However, to prevent a Donor from using the deduction to avoid paying tax, the Internal Revenue Service (IRS) places a cap on the amount of the deduction that can be claimed in the year the donation is made.  The cap is set generally at 30% of the adjusted gross income for individuals.  Individuals may carry over any unused portion of the donation for the next five years and deduct the same percentages each year.

For example, an owner who dontes an easement valued at $100,000 and has an annual adjusted gross income of $60,0000 may deduct 30% of $60,0000 ($18,000) in each of years 1-5 and the remaining $10,000 in year six.

If the land is ordinary income property, the contribution is limited to the basis of the property; no deduction for unrealized appreciation is allowed.

NC Tax Credit

North Carolina has a unique incentive program to assist land-owners to protect the environment and the quality of life. A Credit is allowed against individual and corporate income taxes when real property is donated for conservation purposes. Interests in property that promote specific public benefits may be donated to a qualified recipient. Such conservation donations qualify for a substantial tax credit. Additional information or an application for tax credit certification can be found at:

N.C. Conservation Tax Credit Program
c/o Office of Conservation & Community Affairs
Dept. of Environment and Natural Resources
1601 Mail Service Center
Raleigh, North Carolina 27699-1601
919/715-4191