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Tax workshop draws 100 in Kittitas County

Tax workshop draws 100 to hear about easements

Cascade Land Conservancy co-sponsors session to provide farmers and ranchers on tax law changes on conservation easements.

New ways for farmers and ranchers to possibly reduce federal income taxes attracted about 100 people to the Heritage Center at the Kittitas County Fairgrounds Jan. 30 for a workshop cosponsored by the Cascade Land Conservancy, Kittitas County Conservation District and the Kittitas Conservation Trust.

Experts in easements, trusts and farmland conservation joined a panel to discuss the pros and cons of this new income tax changes. The goal of the workshop was to allow farmers and ranchers to learn about the new federal income tax incentive program for community members who donate a conservation easement on all or part of their land.

Panel members included:
Kevin Eslinger, a local farmer; David Gerth, Kittitas Conservation Trust, executive director; John Fitterer, a Cascade Land Conservancy Board member and local business owner; Anna Lael, Kittitas County Conservation District, and Bruce Coe, a local landowner who has made a Conservation Easement donation.

“This federal tax incentive is a powerful program that could potentially save significant amounts of farmland in Kittitas County,” said Jill Arango, Kittitas County Conservation Director for the CLC.

In a related development, a bipartisan bill was introduced the next day that would make the newly expanded tax incentive for conservation easement donations permanent. The bill was co-sponsored by Sen. Max Baucus (D-MT) and Sen. Charles Grassley (R-IA).

Currently, the 2006 law will expire at the end of this year.  The bill, S. 469, would prevent the expiration and permanently ensure donations of conservation easements are a possibility for modest income level landowners. 

The workshop featured a short presentation about the new tax incentive, and then time for questions and discussion.  Jill Arango, Kittitas County Conservation Director for the CLC, said there was some confusion about whether the tax law change constitutes a tax credit or a tax deduction. “It is a deduction”, Arango said.

The difference is critical.  A tax credit has different advantages than a tax deduction. A tax deduction lowers your taxable income.  A tax credit reduces the tax you pay.

Organizers noted that individual tax returns are all different and this program may or may not work for all.  But it is one option available to conserve farmland.

“The process of deciding to conserve your land in an easement takes time,” Arango said, “and no one should feel rushed. The key is to build a relationship of trust between the landowner and the conservation organization to ensure that the final agreement is solid.”

There are many benefits to a conservation easement.  The details of the document are flexible and reflect the relationship between a landowner and the trust.  An easement may be applied to all or just a part of a landowner’s property; dependent on the future desires of the landowner.  Additionally, an easement lowers the market value of the land which in turn lowers estate taxes, making the land more affordable for the landowner’s heirs.

Follow-up mailings with additional information will go to attendees – specifically information for tax preparers since many attendees wanted that specific information to share with their tax advisors.

Among the changes, the new law:

• Raises the deduction a landowner can take for donating a conservation easement from 30% of their adjusted gross income in any year to 50%.
• Allows qualifying farmers, ranchers and forest landowners to deduct up to 100% of their taxable income (e.g., pay no federal income tax).
• Extends the carry-forward period for a donor to take tax deductions for a conservation easement from 5 to 15 years.
  

Thanks to the co-sponsors who made the workshop so valuable for those who attended. Please go to www.lta.org/publicpolicy/tax_incentives_updates.htm at the Land Trust Alliance for more information on the tax policy.

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