How are the tax benefits of an easement calculated?
Federal Income Tax – Under the Internal Revenue Code, the donation of development rights can be treated as a charitable gift. If the underlying property has been owned for more than one year, the value of the gift can then be deducted up to an amount equal to 30% of the donor’s adjusted gross income in the year of the gift. If a corporation is the donor, the limit is 10% of taxable income. If the easement’s value exceeds 30% of the donor’s income, the excess can be carried forward and deducted (subject to the 30% limit) in each of the five succeeding tax years. State income tax benefits – New York State income tax laws allow for a deduction for donated development rights, consistent with federal income tax rules. Property tax benefits – Local tax assessors should take into account the existence of use restrictions when assessing property. If the property is not already receiving an agricultural use valuation, placing restrictions via the agricultural conservation easement may result in
