Overview

Farmland in Virginia

Facts About The Virginia Land Preservation Tax Credit Program

Since 2004 the Virginia Conservation Credit Exchange, LLC (VCCE) has provided an efficient marketplace for the sale and purchase of land preservation credits. VCCE reviews easement deeds,  appraisals, and other relevant documentation in order to: 1) insure high quality and marketable tax credits, 2) reduce risk of a tax audit, and 3) capture a fair return to easement donors.  To eliminate landowner concerns and reduce the time required on what can be an involved process, VCCE efficiently administers the sale of credits and insures the appropriate paperwork is prepared and filed with the Virginia Department of Taxation (VDT).

History

  • The “Virginia Land Conservation Incentives Act of 1999” went into effect January 1, 2000 to encourage the preservation and sustainability of Virginia’s unique natural resources.
  • The act provides transferable state tax credits to landowners who donate some or all of the value of their property to a qualified land trust.

The Credit

  • The credit is 40% of the fair market value (FMV) of any land or interest in land located in Virginia that is conveyed for conservation purposes. FMV is determined by a qualified appraiser
  • The credit used may not exceed the amount of income tax due.
  • The amount of credit claimed by a taxpayer in any one year may not exceed $20,000, or $40,000 for married filing jointly.
  • Any remaining credit can be carried over for an additional 10 years or sold to another taxpayer.

Donations, Transfers & Credits Claimed

  • More than $1.4 billion in credits have been registered with VDT.
  • Over $1 billion in credits have been transferred.
  • Credits claimed on Virginia tax returns have exceeded $700 million.
  • Credits usually sell for 85% to 90% of their face value, netting landowners approximately 75 – 80%.
  • Landowners pay a fee to VDT of 5% of the face value of the credit.

Other Factors

  • In the event IRS or VDT challenge the donation, sellers (easement donors) provide recourse if the value of the credit is reduced or disallowed.
  • The credits must be transferred by December 31 to offset the current year tax liability, however due to supply constraints, credit purchasers are encouraged to buy as early as possible.