THURSDAY, AUGUST 17, 2006 8:42 AM

Tax changes promote land preservation

BY ROBERT BEHRE

The Post and Courier

President Bush is expected to sign a bill today that would more than triple the tax deduction for many landowners who donate a conservation easement. Some farmers and ranchers might be able to wipe out their federal taxes entirely for years.

Land conservation groups are celebrating and gearing up for an unprecedented increase in easement donations this year and next year. The expanded tax breaks are available for easements given after Jan. 1, but the breaks will expire on Dec. 31, 2007 unless Congress extends them.

Badge Humphries, director of land protection for Ducks Unlimited's South Atlantic region, said the changes come at a watershed moment in the Lowcountry, which is grappling with timber companies selling off large chunks of land, thousands of people moving into the areaand developers flush with cash after years of a booming real-estate market.

'Because of these extraordinary circumstances, Congress could not have picked a better time to increase the tax incentives for conservation contributions,' he said.

The changes raise an easement donor's annual deduction from 30 percent of his income to 50 percent. Also, the donor might take the deduction over a total of 16 years, up from six years. Farmers and ranchers who qualify will be able to deduct up to 100 percent of their donation.

Mary Pope Hutson is chief operating officer of the Land Trust Alliance, which pushed for the changes on behalf of more than 30 conservation and sportsmen's groups across the country.

Their work helped shift the outcome dramatically. The congressional debate began with concerns about easement abuse, particularly instances in which the value of an easement was inflated for tax purposes.

'We're thrilled with the vote of confidence by Congress to present this opportunity for landowners across America, but we also want to continue to emphasize the quality of easements that are written since this will cause a deluge of interest,' Hutson said.

She said the new bill aims to curb easement problems by setting higher standards for appraisals on all donated property and by increasing penalties for abusive appraisals.

While the changes will take effect across the nation, they are particularly welcome in the Lowcountry.

Hutson, former director of the Lowcountry Open Land Trust, said the Lowcountry has had a history of having some of the most generous and conservation-minded landowners, 'although I'm a little biased, as you know.'

Will Haynie, the trust's current director, said the 21-year-old group has about 175 easements covering some 45,000 privately owned acres. Ducks Unlimited has 97,000 acres protected and hopes to surpass the 100,000-acre mark by the end of the year. Haynie said the change comes at a time when the trust has seen some donors unable to take advantage of the full value of their donation because their incomes weren't large enough.

'This helps land-owning families as opposed to the super wealthy,' he said.

Also, the tax changes come as property owners in rural Charleston County have more opportunities than ever to make conservation deals. The county's new Conservation Bank, a nine-member volunteer board able to make recommendations to the county council, is expected to begin meeting this fall to work with half-percent sales tax greenbelt money.

Hutson said South Carolina's conservation groups have done a good job identifying critically important lands, so the focus now will shift to reaching out to landowners, especially because the time frame is so short.

'We're encouraging local land trusts and conservation groups to work hand in hand with state government entities who have regular contact with landowners,' she said.

T. Heyward Carter Jr., a lawyer who has worked on easements and once chaired the Lowcountry Open Land Trust, said most people who give conservation easements on their land aren't necessarily motivated by the tax deduction but by their love of the land and a desire to keep it the way it is.

Still, the increased deduction will help. For instance, Carter said his family already had decided to put an easement on property it owns next to Middleton Place plantation. It had assumed it wouldn't be able to use the entire tax deduction but now it might.

'This is just a bonus as far as I'm concerned,' he said. 'It makes a lot of difference financially.'

One section of the bill tightens restrictions on donations of easements on historic buildings.

Now, any easement must include all the building's facades, not just the main facade.

Spokesmen for both the Historic Charleston Foundation and the Preservation Society, which together have more than 400 easements on local historic buildings, said that change won't affect them; they already require exterior easements to apply to all facades.

Rick Rockwell, the foundation's new easements director, said, 'Charleston is ahead of the curve on this legislation. This is affirming what we already do.'

How it works

PREVIOUSLY:
A landowner who has an annual income of $100,000 and who donates an easement worth $1 million could deduct $30,000 a year (30 percent of his income), for six years, from his federal income taxes. That would mean he would be able to write off only $180,000 of the $1 million gift.

UNDER THE CHANGE:
The same landowner now would be able to deduct $50,000 a year (50 percent of his income) for up to 16 years.

As a result, he now can write off a total of $800,000 of the $1 million gift. Also, qualified farmers and ranchers may deduct 100 percent of their income for up to 16 years.

Reach Robert Behre at 937-5771 or rbehre@postandcourier.com.

This article was printed via the web on 8/23/2006 2:03:48 PM . This article
appeared in The Post and Courier and updated online at Charleston.net on Thursday, August 17, 2006.