In addition, the donor must also:
· Obtain a qualified appraisal
· Have a baseline inventory of the property describing the natural and man-made features
· Include IRS Form 8283 and a Supplemental Statement with the donor’s income tax return
· Provide a written acknowledgement letter from the land trust documenting the acceptance of the easement donation
How the tax deduction works:
The conservation easement’s value (the landowner’s charitable donation) is calculated by finding the difference between the property’s value before the conservation easement (CE), and the value of the property with the CE, as determined by a qualified appraisal. Typically, the more rights given up in a CE, the higher the CE value. The deduction is generally equal to 50 percent of the landowner’s adjusted gross income (AGI) with a carry forward period of 15 years.
Landowner donates an easement on land that is valued at $1 million before the conservation easement is placed. After the conservation easement, the land is now worth $600,000. The value of the CE is therefore $400,000 ($1 million - $600,000). The landowner may deduct a portion of the CE value equal to 50 percent of his/her AGI. If the landowner’s AGI is $50,000, then s/he can take a $25,000 deduction for the year of the donation and assuming the same AGI, take the same deduction for an additional 15 years, for a total of $400,000 in deductions.