Tax Crisis Looms for High-Income Earners and High Net-Worth Individuals: Critical Tax Incentive Legislation for Conservation Easements Up for Vote
“Conservation Easement” Legislation Converges the Capital Interests of Farmers, Ranchers, Preservationists, Conservationists, High Income Earners and High Net Worth Individuals all at Stake Coming Up for Congressional Vote
”Important and potentially extremely valuable tax saving legislation for higher tax bracket Americans is up for a vote in the coming days Congress that can seriously impact, either favorably or negatively, high income-earning individuals, high net-worth individuals and a host of land owners and conservationists,” says Ray Phair, Chief Operating Officer of The Tax Saving Professionals, a national tax consulting firm that monitors such matters on behalf of its nearly 7000 present and former clients.
“While this sounds like a conflicted mix of constituencies that might generally be at odds with one another,” says Phair, “the fact is, there is much at stake in the way of land preservation for farmers, ranchers and conservationists along with high-income earning Americas all of whose interests remarkably align to produce a win-win for Americans and land-owners across the country.”
What’s at Stake
The enhanced incentive helps landowners of modest means choose conservation by:
- Raising the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%;
- Allowing qualified farmers and ranchers to deduct up to 100% of their AGI; and
- Increasing the number of years over which a donor can take deductions from 6 to 16 years.
Without the enhanced easement incentive, an agricultural landowner earning $50,000 a year who donated a conservation easement worth $1 million could take a total of no more than $90,000 in tax deductions! Under the enhanced incentive, that landowner can take as much as $800,000 in tax deductions – still less than the full value of their donation, but a significant increase.
The Legislation/The Background: Conservation Easement Program
Since 2006, an enhanced income tax deduction has allowed family farmers, ranchers, and forest land owners to get a significant tax benefit for donating a conservation easement on their land. Unfortunately, this legislation expired at the end of 2013 and legislators are seeking the assistance of voters to ensure that this valuable legislation does not disappear permanently.
How a Conservation Easement Works to Reduce Taxes
Conservation easements allow private landowners to permanently retire development rights to protect significant natural resources. The enhanced conservation easement tax incentive opened the door to voluntary, landowner-led conservation on millions of acres of important wildlife habitat, farmland, and scenic open space across the country. The incentive also enhances “bargain sales” of easements purchased by local, state and federal conservation agencies.
Conservation Easements: Proven Effective and Valuable
A survey by the Land Trust Alliance showed that this incentive helped America’s 1,700 land trusts increase the pace of conservation by a third – to over a million acres a year. Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) introduced S. 526, the Rural Heritage Conservation Extension Act, and Representatives Jim Gerlach (R-PA) and Mike Thompson (D-CA) introduced H.R. 2807, the Conservation Easement Incentive Act in the House to make the incentive permanent. A bipartisan group of more than 200 Members of Congress have co-sponsored these bills, but we need your support to get this legislation across the finish line. On May 29, the Ways & Means Committee voted in favor of sending H.R. 2807 to the House floor.
Donating development rights to land – often a family’s most valuable asset – requires careful planning and consideration. It often takes years from the initial conversations with a landowner before a conservation easement is executed. Landowners considering a perpetual commitment of their land should not be pressured by an artificial deadline, and many will never begin the process without the reassurance of a permanent incentive.
View Representative Jim Gerlach’s (R-PA/6th) Introduction and Support of the Conservation Easement Bill
How You Can Help/What You Can Do
“Farmers, ranchers, landowners, conservationists and high-net-worth individuals all have a major stake in the outcome of this legislation,” says Phair who urges those whose property, families, livelihoods and future finances hang in the balance in this upcoming vote to contact congressional office and ask your representative to support H.R. 2807 when it comes to the floor.
The importance of this bill is the difference between a 30% (present legislation) and a 50% (proposed) reduction in our clients that are business owners Adjusted Gross Income. Additionally land is preserved to keep evergreen. Here is a link to an exceptional document produced by the “National Young Farmers Coalition” that discusses “How Land Trusts can Protect America’s Working Farms” — https://bit.ly/1nfq0iH.
To make it easy we have include the following links:
· If they did support it say ‘thank you’ and ask that they personally urge House leadership to call up H.R. 2807 for a vote »
This is a real opportunity to make the enhanced easement incentive permanent. This opportunity came from years of work by American’s, and land trust leaders, among a host of other constituents to build broad, bipartisan support. “We strongly support this legislation and use if for our clients,” says Phair. Phair continues: “We have seen the tremendous financial value this conservation easement brings to American’s and the great good it does for farmers, ranchers, land owners and conservationists, we’ve never seen a more effective piece of government legislation that positively impacts on such a wide cross section of Americans.”