The New York State Conservation Easement Tax Credit (CETC) offers NY taxpayers whose land is restricted by a conservation easement an annual NY State income tax credit of up to 25% of the school district, county and town real estate taxes paid on the restricted land , up to an annual maximum of $5,000 per taxpayer. Unlike a tax deduction, which is an adjustment to taxable income, a tax credit offsets a taxpayer's lax liability on a dollar-for-dollar basis. The CETC is a REFUNDABLE income tax credit, which means that if a landowner's tax credit exceeds the amount he or she woes in state income taxes, the landowner gets a check for the difference.
The CETC is available to individual landowners, estates, trusts, partnerships and certain corporations as long as the land they own is restricted by a perpetual and permanent conservation easement as defined in Article 49 of New York's Environmental Law. The land must be located in New York State and the conservation easement must be held by a public or private conservation agency. The easement must serve to protect open space, biodiversity or scenic, natural agricultural, watershed, or historic preservation resources by limiting or restricting development, management and/or use of the property.
The easement must be filed with the Department of Environmental Conservation (DEC) and must comply with Section 170(h) of the Internal Revenue Code (IRC): i.e. it was donated or partially donated (sold for less than fair market value) to a public or private conservation agency.
The CETC applies to all conservation easements, regardless of when they were created, provided they meet the criteria listed above. They DO NOT APPLY to
non-conservation easements, such as utility or transportation rights-of-way, etc. Nor does it apply to conservation easements that were created for the purpose of obtaining subdivision or building permits or to easements that were required as mitigation. These easements do not comply with IRC Section 170 (h). Likewise, deed restrictions that do not conform to the definition of "conservation easement" in Article 49, Title 3, of the NYS Environmental Law do not qualify for the credit, even if they have a conservation purpose. You can claim a tax credit for each of the qualified easements on your land up to a total of $5,000 per year for all of them.In order to claim a CETC, a landowner will need the following information:
Further Notes on CETC:
There are several ways a landowner can prove compliance with IRC, Section 170 (h):
[Fraction of assessment represented by land X fraction of land protected by easement X total property tax = allocated taxes]
A landowner pays a total of $10,000 in property taxes on a 100-acre parcel. of which 75 acres is protected by a conservation easement. The landowner learns from the assessor that the house and garage account for 50% of the assessed value of the property. The landowner would calculate the allocated taxes as follows:
[ .75 (fraction of land) X .5 (fraction of assessment that applies to land) X
$10,000 (total property taxes) - $3,750 (allocated taxes) ]
The tax credit is 25% of the allocated taxes or $937.50
FOR FURTHER INFORMATION?
Contact the RLT Office (518-659-LAND (5263)) OR the Land Trust Alliance (518-587- 0774).
The information about the New York State Conservation Easement Tax Credit contained in this document is furnished as a tool to assist qualified landowners. It is provided with the understanding that the Rensselaer Land Trust or the Land Trust Alliance is not engaged in rendering legal, accounting, tax or other counsel. If legal advice or other expert assistance is required, the services of a competent professional should be sought. This document is not a substitute for legal, accounting, or tax advice and should not be relied on as such.
A NOTE OF THANKS:
The RLT is grateful to the LTA for providing guidance with this new State tax incentive program.