News & Publications

Conservation Law Alert – Changes to Conservation Easement Tax Credits and Incentives

Colorado Tax Credit

There is good news and good news. The Colorado Legislature increased the maximum Colorado Conservation Easement Tax Credit from $375,000 to $1,500,000. The tax credit is equal to 50% of the donated value of the conservation easement (75% for the first $100,000 of donated value) up to the cap of $1,500,000.

The bad news was the administration of the program by the state had become muddled. More good news is that Mark Weston was recently appointed director of the tax credit program. Mark is an appraiser with over thirty years’ experience in appraising conservation easements, and is a well-respected leader in the conservation community.

Further good news is that under the leadership of Division Director Marcia Waters and Program Director Mark Weston, the state published the results of a rapid improvement workshop for the program. The changes in procedure include review of appraisals by a single examiner, rather than multiple staff reviews; streamlining of conservation purpose reviews; and, most importantly, improving communication between the program staff and the conservation easement appraisers.

The combination of these developments means that conservation in Colorado is alive and well, and open for conservation of important land, with one of the most generous state tax incentives in the nation.

Federal Tax Incentives

In the waning days of 2015, U.S. Congress made the enhanced federal tax incentive for conservation easements permanent. This means that the federal charitable deduction for conservation easement donations may be used to offset up to 50% of taxable income (rather than 30%) and any unused portion of the donation can be carried forward and used during the next fifteen years (rather than five). It also means that farmers and ranchers may use the conservation easement deduction to offset their entire taxable income. This enhanced incentive had been in place, on and off, since 2006. Now it is a permanent part of the Internal Revenue Code.