Workshop for Landowners held Oct. 13

New tax benefits available for anyone who owns land in Massachusetts, whether they live here or pay taxes here or not.  A free public workshop on the benefits was held on  October 13, 2012 at the Brewster Ladies’ Library.

For the first time ever, landowners who engage in conservation transactions with non-profit land trusts, like the Brewster Conservation Trust, towns or agencies can be eligible for a powerful new tax advantage—a refundable State income tax credit worth up to $50,000 in cash.  This should be exciting news for landowners.  While there have always been income tax deductions available for land gifts on a donor’s federal returns, there have never been any incentives on the State tax side.  Now there are both.  Property tax relief is another consideration.

The Commonwealth has provided guidelines on how the state tax credit program will work. The type of transaction (land gift, conservation restriction, bargain sale, reserved life estate) is less important than the characteristics of the land itself, so long as the land is permanently protected.  The Office of Energy and Environmental Affairs must certify that the land is significant to protect drinking water supplies, rare species and other wildlife habitats, agriculture or forestry, recreational opportunities and scenic or cultural values of state or regional importance.  While those themes are fairly broad, you can see how a gift of a vacant lot in a subdivision might not qualify.  Still, Cape Cod is still blessed with many large and small parcels that have been neither yet developed nor preserved that could qualify.

An appraisal is needed to justify that the land’s market value and establish the credit amount.  The title to the land must be clear.  The State will refund any unused credit in the first year of the gift.  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 donate a parcel worth $30,000, your tax credit would be $15,000.  If your Mass. income tax is $5,000, you would pay no state tax and get a tax refund for the remaining $10,000.

If you donate 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.  (The total of tax credit and refund check cannot exceed $50,000.)  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.  The State approved the first 22 applications in December, returning $976,000 in credits to landowners, including six on the Cape.  Another dozen landowners have qualified for 2012.  We encourage more landowners to “get in line” for 2013; there is $2 million available statewide each year.

Remember that this new tax credit is in addition to the regular federal income tax incentives for charitable contributions of land or land interests.  We can be contacted for more details or a free, confidential consultation at BCT@BrewsterConservationTrust.org.

(prepared October 2012 by Mark H. Robinson, Executive Director of The Compact of Cape Cod Conservation Trusts, Inc.)

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