Thursday, May 17, 2007
Enjoy your land with lower tax bills
From the RoundTable blog
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Broaddus Fitzpatrick
Fitzpatrick, of Roanoke, has served as vice president of the nonprofit Western Virginia Land Trust board.
Many Virginia landowners who are concerned about how much they're paying in local, state and federal taxes have options available to them. In your March 28 article "Roanoke Co. lowers property tax rates by two pennies," Catawba resident Joseph Nieve is quoted as saying, "We pay federal taxes and state taxes. You can't squeeze any more out of us." That hits home for most of us.
Fortunately, landowners who own more than 100 contiguous acres of farm or rural lands can significantly lower or eliminate their state and federal tax burden for years to come, and lock themselves into their county's lowest property tax rate. They can also preserve and protect their land for the enjoyment of their children and grandchildren and reduce or eliminate their children's estate tax burden when they inherit the land. How can all this be done? With a conservation easement.
A conservation easement is a way for landowners to permanently protect their land from certain kinds of development. It limits how many houses can be built on the land and how many times it can be subdivided, but the land can still be used for farming, timbering, hunting, fishing and most other rural land uses.
Conservation easements don't require any public access to the land. The landowner still owns the property, and it can still be sold or passed on to his heirs. In addition, the federal and state government provide very generous tax incentives to landowners who place conservation easements on their lands.
For example, the federal government offers a whopping 50 percent deduction off your adjusted gross income (100 percent if you're a farmer), and provides up to 15 years for the deduction to be fully utilized.
The state rewards landowners with tax credits that can either be applied to your state income tax bill or sold on the open market. Because a conservation easement lowers the value of the land in the eyes of developers and the IRS, the landowners' heirs will pay less in estate taxes when the landowner dies, instead of having to possibly sell the land to pay the taxes on it.
Lastly, land with a conservation easement is automatically taxed at the lowest available property tax rate if your county has land-use taxation, saving landowners the hassle of remembering to reapply every year. If your county does not offer land-use taxation, it is required to take the easement into consideration when assessing the property.
Conservation easements are permanent restrictions on the use of property and should be done carefully and in consultation with your personal legal and tax advisers. Easements aren't the solution for every taxpayer who has concerns about rising taxes. But for the right folks, they are a great way to reduce tax burden while protecting your land for your family's future benefit.
For more information, contact the Western Virginia Land Trust at (540) 985-0000.
