Virginia Land Preservation Tax Credit Prospective Donor Information By Land Conservation Concepts, Inc.

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Landowners contemplating a donation can maximize benefits by carefully considering their objectives and exploring the financial implications of each available option. Your options include keeping the land as it is and doing nothing, donating the land or a partial interest (a conservation easement), and selling the land or a conservation easement.

Early on, have a tax advisor who is fluent in the treatment of land and conservation easement donations run pro-forma scenarios through your tax returns and estate plans. This scenario analysis will help you make an informed decision on how best to achieve your objectives. It is better to discover that a donation is not in your best interest early on, before you incur unnecessary legal and appraisal expenses.

Well-informed prospective donors are more likely to achieve their objectives. You can learn much by attending land preservation conferences and seminars sponsored by the Virginia Department of Forestry, the Department of Agriculture and Consumer Services, other State and local government agencies, and private land preservation organizations.

The Virginia Department of Forestry's "Tomorrow Woods" land conservation incentive program subsidizes legal, appraisal, and title insurance fees for conservation easement donations on working forests in southeast Virginia. The USDA Natural Resources Conservation Service has $4,589,047 in Farm and Ranchland Protection Program (FRPP) funding for purchasing conservation easements in Virginia during Federal fiscal year 2012. The FRPP funds are targeted for privately owned prime farmland and land containing significant cultural or historic resources. Links will open in a separate window.

If you decide to proceed with a donation, educate yourself on potential problem areas. This will enable you to be an informed consumer of legal and appraisal services. The land preservation conferences and seminars we've attended in Virginia usually cover Department of Taxation enforcement issues. The IRS released its Conservation Easement Audit Techniques Guide to the public in November 2011. The Land Trust Alliance (LTA) assembles IRS expert panels at its annual "Rally" to discuss current Federal enforcement priorities. LTA publishes informative highlights of the panel discussions. Links will open in a separate window.

Prospective donors should ensure that the professionals they hire to help them through the donation process are highly qualified and experienced in this specialized area of practice. This is particularly important regarding the attorney who drafts the deed, the appraiser who values the donation, and the tax advisor who plans the financial aspects of the donation and prepares the tax filings and credit application. If the deed for the donation is not properly prepared, the qualified appraisal inadequately supports the claimed donation value, the tax filings are not correctly prepared, etc., the donor may find that there is no market for their land preservation tax credits, to say nothing of audit risk.

Other landowners in your area who have successfully completed their donations and tax credit sales are likely to be reliable sources for referrals and references. The esteem in which attorneys, appraisers, and tax advisors are held by their peers and former customers can be a useful indicator. Additional factors to consider are training, certifications, years of experience working with similar donations, and track records. Have the professionals you are considering hiring worked on any donations that have been challenged by the tax authorities? If so, did the tax authorities adjust the donation value?

The Virginia State Bar and the Virginia Real Estate Appraiser Board publish attorney and appraiser disciplinary history and licensure status information online. The Appraisal Institute publishes an online directory of member appraisers who have successfully passed its Valuation of Conservation Easements Professional Development Program. Links will open in a separate window.