N.C. conservation easement tax credit to expire
To the concern of some local land preservation leaders, a state tax incentive that’s been on the books since 1983 was eliminated in tax reform legislation passed earlier this year in an effort to boost the state’s economy.
The conservation easement tax credit, now set to expire Dec. 31, gives a break to landowners and businesses who donate the future rights to develop their land. It was marked for elimination as part of tax reform legislation passed by the Republican-led legislation and signed by Gov. Pat McCrory earlier this year.
“I firmly believe that this reform package will prove to be critically important to growing North Carolina's economy and getting people back to work,” McCrory said in a prepared statement after the signing of the legislation this summer.
The measure will reduce the three-tiered state personal income tax to a single rate starting next year, and will also cut the corporate tax rate starting in 2014. It eliminated the state’s sales tax holiday as well as a list of tax credits, including the one for conservation easement donations. Attempts to get further comment from McCrory’s office were unsuccessful.
Linda Pearsall, director of conservation, planning and community affairs for the N.C. Department of Environment and Natural Resources, said that if landowners make a donation prior to the Dec. 31 deadline, they can still take advantage of the credit when filing their 2013 taxes. She also said department officials have heard that there’s been more interest in getting donations finalized this year ahead of the credit’s expiration.
Chad Jemison, executive director of the Triangle Land Conservancy, said the 30-year-old conservation group had 10 to 15 new inquiries from landowners since the summer.
He also said some existing projects have been fast-tracked to beat the deadline. He was hopeful for “new ways forward” after the credit expires.
“There is a role in protecting open space that has historically received broad bipartisan support in the Triangle and in North Carolina,” he said. “We’re confident that champions will emerge to find the new way forward.”
Kurt Schlimme, director of conservation for the Eno River Association, a preservation group that focuses on protecting land along the Eno River and its tributaries, said he believes the expiration will negatively impact easement and land donations.
When there’s no more money for buying easements or properties, tax credits at the federal and state level have helped urge landowners to donate.
“I would imagine with the loss of the tax credit, the landowners … would decrease,” he said.
Rich Shaw, Orange County’s land conservation manger, said it’s more common for Orange County to buy conservation easements than for landowners to try to donate and receive tax credits. But he also said the county does receive inquiries from landowners “from time to time” who want to take advantage of the credits.
They help the county to use its dollars more efficiently, he said, especially in the case of bargain sales in which landowners sell easements, but at below-value prices. The landowner then gets a tax credit from the state and federal government for the donated portion.
While he said Orange County isn’t seeing a “flurry of activity” as a result of the state conservation tax credit’s expiration, the credit has been around for a long time, he said, and “a lot of conservation has occurred as a result of that.”
Russell Shay, director of public policy for the Washington D.C.-based Land Trust Alliance, a national conservation organization, said the expiration of North Carolina’s conservation easement tax credit is “really very sad.”
“I think lots of North Carolinians realize how important the landscape of North Carolina is to the state, not just as a natural asset, but as an economic asset, not just as farmland, but as scenery that draws tourism,” he said. “And that makes North Carolina a place that people want to live and businesses want to locate.”