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A conservation easement is a voluntary, legally-binding and perpetual restriction that limits certain uses and prevents future development of a property. It is a recorded deed restriction enforced by a conservation easement holder. Important conservation values, such as habitat, open space, scenic views, agriculture, outdoor recreation, and education, are protected.
A tax credit certificate is a document issued by the Division of Real Estate that allows a landowner who donated a conservation easement to claim a tax credit on their state income tax return if specific requirements are met. The tax credit is not a tax deduction, but rather is a dollar-for-dollar reduction of state tax liability. The tax credit certificate is transferable and can be sold only once. Effective January 1, 2015, tax credit certificates are issued for 75% of the first $100,000 of the donated value and then 50% of any remaining amounts in excess of $100,000 up to a maximum credit of $1.5 million per donation.
The process for applying for a tax credit certificate changed January 1, 2014 with the introduction of a pre-approval process under Senate Bill 13-221.
Prior to January 1, 2014, the Department of Revenue has the authority to determine whether a conservation easement donation generating a tax credit complies with the statutory and regulatory requirements.
Follow the instructions below to apply for a tax credit certificate not subject to the pre-approval process:
The application must include:
A list of the dates that individual tax credit certificates were issued by the Division of Real Estate for 2011-2013 donations is available to be downloaded, under Resources.
The Conservation Easement Oversight Commission (the Commission) and Director of the Division of Real Estate (the Director) make the determination to approve or deny an application for a tax credit certificate. In making that determination, the Commission assesses whether the conservation easement donation associated with the application is a qualified conservation contribution under section 170(h) of the federal Internal Revenue Code. The Director determines whether the donation is supported with a credible appraisal prepared by a qualified appraiser. Applications that meet both requirements are approved and issued tax credit certificates. Reviews will be completed in an average of 120 days, depending on the complexity of the transaction. The issuance of a tax credit certificate by the Division of Real Estate does not restrict the authority of the Department of Revenue to reject a tax credit claim based upon tax compliance matters.
For more information regarding the authorities of the tax credit certificate program, please read this disclosure.
Follow the instructions below to apply for a tax credit certificate subject to the pre-approval process:
A complete application must include:
The Division of Real Estate offers an optional Preliminary Advisory Opinion (PAO) for a tax credit certificate. A PAO determines whether the anticipated donation is likely to be approved for a tax credit certificate. An application may be submitted for an opinion of a prospective donation’s conservation purpose and/or appraisal. The request for a PAO is not an application for a tax credit certificate and any opinion issued is nonbinding.
Follow the instructions below to request a Preliminary Advisory Opinion (PAO):
A complete application for conservation purpose must include:
A complete application for the appraisal must include: