New law improves farmland, battlefield tax deductions

Jefferson County landowners wishing to protect their land can benefit from a federal tax provision for this year that was buried in the fiscal cliff legislation. And, if they are located in a Civil War battle area, they may also be able to tap federal money for battlefield protection.

Both programs are in addition to assistance that may be available from the county Farmland Protection Board, although in recent years that program has been hurt by the limited funding generated by the real estate transfer tax.

The fiscal cliff legislation reinstated — for 2013 — the enhanced federal tax deduction for conservation easements, under which the value of a conservation easement can be deducted against up to 50 percent of income, with any surplus carried forward for up to 15 years. Otherwise, the deduction is against up to 30 percent of income with a carry-forward of 5 years.

The value of a conservation easement is the difference in the value of land when it can be developed and it can only be used for farming or as forest. In Jefferson County, easement values run from $3,800 to $6,000 per acre, which means that an easement on 100 acres would generate from $380,000 to $600,000 in federal tax deductions.

Moreover, land located in one of the four congressionally recognized Civil War battlefields in the county can qualify for payment of up to half the value of the easement from the National Park Service’s American Battlefield Protection Program. Those four battlefields are Harpers Ferry, Shepherdstown, Summit Point and Smithfield Crossing (Middleway).

Thus, a landowner with 100 acres in one of the battlefield areas could get $190,000 to $300,000 from the ABPP and deduct the remainder of the value of the easement from his or her federal income tax.

Even farmers that apply for Farmland Protection Board funding may want to get paid for most of the value of an easement but donate the balance, thereby improving their chances of getting access to the limited FPB funds. Many have done just this in the past, effectively stretching the FPB money to protect more acres than would otherwise be possible. Several have also been able to benefit from ABPP funding for conservation easements on their property.

A conservation easement permanently restricts the use of land to nondevelopment purposes and is recorded with the county clerk, just like a sale or mortgage. The landowner continues to own the property, and public access is not required. Details can be worked out to accommodate the specifics of the property and the desires of the owner.

The Land Trust of the Eastern Panhandle has helped eight Jefferson County landowners obtain over $2 million in funding from the ABPP, beginning in 2004. Those easements protect 857 acres of scenic land, part of it east of Shepherdstown in the area of the Battle of Shepherdstown, with the balance west of Charles Town, in the area of the Battles of Summit Point and Smithfield Crossing, or Middleway.

The largest ABPP-funded easement, completed late last year, protects 264 acres around the Claymont mansion, and the second largest protects 219 acres around the Harewood mansion. Both Claymont and Harewood are Washington family homes, with the land around them involved in the Battle of Summit Point in 1864.

While the Land Trust of the Eastern Panhandle has taken the lead, together with the Jefferson County Farmland Protection Board, in obtaining ABPP funding, other nonprofit organizations that hold conservation easements in Jefferson County include the Potomac Conservancy and the Appalachian Trail Conservancy.

The organization holding an easement photographs and otherwise documents the state of the land at the time the easement is placed. It uses that documentation to monitor the property annually so that it can enforce the terms of the easement.

— Grant Smith is the president of the Land Trust of the Eastern Panhandle.

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