When you protect your land, you may be able to claim one of these two federal income tax deductions:
- A federal charitable gift deduction for land donations or bargain sales
Like a check to your favorite charity
Your donation or bargain sale of land for conservation provides lasting public benefit. You are caring for the land, water and wildlife now and into the future. You might also provide opportunities for future Iowans to encounter nature on the land you protect.
Because of this public benefit, your donation of land or land value is a qualified charitable contribution, eligible for the same federal tax benefits as other charitable gifts you may be donating. Qualified charitable contributions are generally eligible to be claimed as itemized federal deductions, within the income limits set by the IRS.
You begin to claim this deduction in the same tax year in which you donate the land or land value. If your gift value exceeds what you can claim that year, you can carry forward the unclaimed portion to the next tax years, up to five more years, or until the gift is fully claimed.
See Income Tax Benefits for background about income tax deductibility.
Easement or other method?
Your tax deduction should not be the driving factor when you choose the protection method that’s best for your situation and your land.
Landowners or advisers can be tempted to choose a conservation easement over other methods simply because an enhanced federal income tax deduction is offered for donated conservation easements — particularly easements on working lands such as farms and ranches. But this is only one factor in your decision. Other factors may be ultimately more important in successfully meeting your goals for your land.
We recommend you compare the multiple advantages of each method before deciding what’s right for you. The Getting Started section of the website and the INHF staff can help you explore your options, weighing tax benefits as well as other benefits.
***Federal Tax Law Changes
Changes to the tax laws in 2018 have effected federal deductibility of donations when used in conjunction with the Iowa Conservation Tax Credit. The new federal rules require the federal deduction be reduced by the amount claimed for a state tax credit. As an example, a gift value of $200,000, would result in $100,000 state tax credit and qualify for $100,000 in federal tax deductions. And for another example, a gift value of $300,000 would result in $100,000 state tax credit (capped at $100,000) and $200,000 in federal deduction. There are additional nuisances that may be applicable depending on the gift and so donors are HIGHLY encouraged to discuss the tax impact with their tax preparer.