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The Trustees of Reservations

Friday, April 20, 2012

2012 Massachusetts Conservation Tax Credit announced and accepting applications!

Tax season is now behind us (phew!), but is it ever too early to start thinking about next year?  If you or someone you know is weighing the possibility of land conservation - outright donation, Conservation Restriction donation, or bargain sale of land or CRs - we want to inform you about an exciting state tax credit of up to $50,000.  In late March, the State Executive Office of Energy and Environmental Affairs (EEA) announced that it is now accepting applications for the 2012 Conservation Land Tax Credit Program (CLTC)!  Last year was the credit's inaugural year, and it was administered through a lottery, but this year's credit will be awarded on a first-come, first-served basis.  The credit is capped at $2 million in credits distributed each year, which means at least forty full $50,000 credits, or a substantially higher number of lesser credits are available!  As implied, lesser credits are available for smaller-value donations that would receive, say, a $20,000 credit rather than a $50,000 credit.  

Rich wildlife habitats may qualify for a tax credit!
The CLTC marks the first time that Massachusetts has offered a tax incentive for land conservation donations.  This tax credit is in addition to federal income tax deductions available for land gifts.   
Land characteristics are more important than the type of transaction - generally, land is eligible, via state EEA determination, if it contains public conservation values significant to protect drinking water supplies, rare species and other wildlife habitats, agricultural or forestry lands, recreational opportunities and scenic or cultural values of state or regional importance.  Land must be put into perpetual conservation in order to qualify. 

As a first step, the landowner must apply to the program before the gift or bargain sale is completed.     

Land with rich agricultural and scenic value may be eligible for the new tax credit!

Once the property has been pre-approved by the Commonwealth, the landowner is required to obtain an appraisal of the property to determine the land’s market value.  The appraisal establishes the amount of the tax credit and the credit is applied to the amount of income tax that you owe. The State will apply the credit to your tax liability in the year of the gift.  If the credit exceeds your tax liability, the state will issue a check for the remainder of the credit.  That means that not only would your State income tax be wiped out for that year, but the State will issue you a check for the difference between that year’s tax and $50,000 or 50 percent of the appraised value, whichever is less.  For example, if you donated a conservation restriction appraised at $120,000, your tax credit would be the maximum $50,000.  If your Mass. income tax is $10,000, you would pay no state tax and get a check for the $40,000 difference.  You do not need to reside in Massachusetts or even pay taxes here; so long as you own the land, and the land qualifies, you qualify. 

Guidelines on how the credit works, and how to apply, are available at the EEA's webpage for the credit - Click here to access it.

Remember, since there is the $2 million budget limit on the credit, and it must be for a project completed in 2012 (recorded at the Registry of Deeds), the sooner you initiate a project and apply for the credit, the better your chances for receiving it. 

Find a potential land trust partner for your land conservation project, here at The Trustees of Reservations, or at the Massachusetts Land Trust Coalition!  We are thrilled that Massachusetts has joined the dozen forward-thinking states that supply state tax credits for land conservation! 

Post by Andrew Bentley - special thanks to TTOR Westport Community Conservation Specialist, Chris Detwiller, for adapted content!

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