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You may scroll down and read this page in its entirety or navigate by clicking the following topic links: What is the Virginia Land Preservation Tax Credit? The Land Preservation Tax Credit is created when a landowner donates a conservation easement on their property. A conservation easement is a landowner's relinquishment of certain property rights in perpetuity. Typically, the property rights relinquished include development rights, or the ability to conduct certain types of activities on the property. Conservation easements are conveyed by deed of gift to independent holders such as land trusts, which are responsible for monitoring and enforcing compliance. If a conservation easement diminishes the value of the property, the owners may claim part of the diminution as a credit against their Virginia income tax liability. For conservation easements donated after January 1, 2007, 40% of the diminution may be claimed. For easements donated before January 1, 2007, 50% of the diminution could be claimed. Click here to return to the FAQ list at the top of the page How do I register Virginia Land Preservation Tax Credits? Before Land Preservation Tax Credits may be used to pay Virginia income taxes or transferred to buyers, they must be registered with the Virginia Department of Taxation. Form LPC-1 is the application for registering credits. The total amount of credit that may be registered in each tax year is capped at approximately $100,000,000 by statute, with periodic adjustments for inflation. Special review requirements apply to conservation easements recorded after January 1, 2007 yielding $1,000,000 or more in credits. For these easements, the Virginia Department of Conservation and Recreation (DCR) must verify conservation value before Taxation will register the credits. The DCR verification process is not required to register credits resulting from easements recorded before January 1, 2007, or those resulting from easements recorded after January 1, 2007 yielding less than $1,000,000 in credits. Once Taxation processes the Form LPC-1, they send you an acknowledgement letter to confirm that you have registered the credits. Click here to return to the FAQ list at the top of the page How much of my Virginia income tax liability can I pay with Virginia Land Preservation Tax Credits in a given tax year? Former Governor Kaine and the Legislature reduced the amount of Land Preservation Tax Credit that may be claimed in tax years 2009 and 2010. Individual taxpayers may claim up to $50,000 in each of these tax years. Married couples filing jointly may claim up to $100,000 if each spouse separately purchases $50,000 of credit. In 2011 and subsequent tax years, the limit reverts to $100,000 per taxpayer. Business entities filing consolidated returns should note that the Virginia Department of Taxation views unconsolidated affiliates as separate taxpayers. Click here to return to the FAQ list at the top of the page How long do Virginia Land Preservation Tax Credits last? Generally speaking, Land Preservation Tax Credits created before January 1, 2007 may be used for five years after the year in which they were created. Credits created after January 1, 2007 may be used for ten years after the year in which they were created. Credits cannot be used to pay Virginia income tax liabilities for years prior to their creation or purchase, nor can their life be extended by overpaying current year tax liabilities. However, former Governor Kaine and the Legislature enacted special requirements to extend the life of credits owned by taxpayers adversely affected by the reduction of the amount that may be claimed in tax years 2009 and 2010. Click here to return to the FAQ list at the top of the page What if I cannot use my Virginia Land Preservation Tax Credits before they expire? If you are liable for any state or local taxes in Virginia and the Land Preservation Tax Credits have not yet expired, you may sell them. Land Conservation Concepts, Inc. markets Land Preservation Tax Credits and helps sellers transfer them to buyers. Click here to return to the FAQ list at the top of the page What are my Virginia Land Preservation Tax Credits worth? Land Preservation Tax Credits generally sell for a discount to their face value. Tax credit sellers get cash for a tax credit they might otherwise be unable to use. Tax credit buyers realize a discount on their Virginia income tax liability by paying it with tax credits they purchased for less than face value. To illustrate: if a buyer purchases $10,000 of Land Preservation Tax Credits at a discount of 20% from face value (for $8,000) the buyer could pay his or her $10,000 Virginia State Income Tax liability with the credits in lieu of cash, at savings of $2,000. This equates to a 25% return on the $8,000 purchase. Click here to return to the FAQ list at the top of the page How much does it cost to sell my Virginia Land Preservation Tax Credits? For Land Preservation Tax Credits created after January 1, 2007, the Virginia Department of Taxation imposes a 2% transfer fee on the appraised value of the conservation easement donation, capped at $10,000 per credit holder per donation. This equates to $.05 per dollar of credit face value. For credits created before January 1, 2007, the Virginia Department of Taxation imposes no transfer fee. Land Conservation Concepts, Inc. charges a nominal fee for introducing the seller and buyer and facilitating the credit transfer. Click here to return to the FAQ list at the top of the page Are there limits on how many Virginia Land Preservation Tax Credits I can sell in a given tax year? No - if you are liable for any state or local taxes in Virginia and the Land Preservation Tax Credits have not yet expired, you may sell all of them in any year. Sellers are limited only by how many credits they have to sell and the willingness of buyers to purchase the credits at the seller's price. Sellers are strongly encouraged to consult with their advisors on the tax implications of any sales. Click here to return to the FAQ list at the top of the page How do I purchase Virginia Land Preservation Tax Credits? Contact Land Conservation Concepts, Inc. so that we may quote current pricing for the Land Preservation Tax Credits we are marketing and send you a contract. When you are ready to proceed, sign and return our contract. After we receive your contract, we'll confirm your credit allocation, closing date, and the payee for your check. We complete closings within two weeks, subject to seller availability to sign the transfer form. Form LPC-2 is used to transfer credits. Once we receive your check and the transfer form notarized by the seller, we send the transfer form to the Virginia Department of Taxation, and your check to the seller. Once Taxation processes the transfer form, they send you an acknowledgement letter to confirm that you have the credits. Click here to return to the FAQ list at the top of the page Are there limits on how many Virginia Land Preservation Tax Credits I can purchase in a given tax year? No - you may purchase as many Land Preservation Tax Credits as you wish in any year. Once you have purchased the credits, you may use them to pay your Virginia income taxes subject to the per-taxpayer limits of $50,000 in tax years 2009 and 2010, and $100,000 in 2011 and subsequent tax years. The credits may not be used to pay Virginia income tax liabilities for years prior to their creation or purchase, nor may their life be extended by overpaying current year tax liabilities. If you cannot use all of your credits before they expire, you may re-sell them. Click here to return to the FAQ list at the top of the page Is there any downside risk? If the deed of gift for the conservation easement is not properly prepared, or the qualified appraisal of the conservation easement overstates the value of the donation, the IRS and the Virginia Department of Taxation may discount or disallow the value of the conservation easement and the Land Preservation Tax credits. The agencies have challenged easement deeds and appraisals they perceive to be abusive. Prospective conservation easement donors can mitigate this risk by ensuring that the attorney who drafts the easement deed, the appraiser who values the easement donation, and the tax advisor who plans the financial aspects of the transaction are highly qualified and experienced in this specialized area of practice. Tax credit buyers can hedge their risk by purchasing credits backed by donor indemnification. Click here to return to the FAQ list at the top of the page How may we assist you? Land Conservation Concepts, Inc.
P.O. Box 485 (Mail)/401 Main Street (Shipping) Mathews, Virginia 23109
Voice: (804) 725-0111 Email: Info@LandCC.com
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