Although the Chattooga River watershed has a large proportion of public lands, there are many unique natural and cultural features on private lands that are deserving of protection. These lands are important to the fabric of this region because they illustrate people’s pride in their natural and cultural heritage. Rural landscapes in the watershed lie in wide creek valleys that have been shaped by the diligent work of many generations of industrious mountain people. Working farms and forests have and continue to provide financial and spiritual sustenance to the communities surrounding them. In many instances, these lands are being forever lost to inappropriate development. The cost to the land and people in this area is the loss of a true native identity.

Exponential economic growth in the South is making one small town indistinguishable from another. National suppliers, retailers and services have overwhelmed the capacity of many local businesses to survive. Convenience, for better or for worse, has become the driving force in the economy. Because distinctions are becoming less apparent, what truly distinguishes one community from another is the value placed on the condition of the land.

This area is attractive not in spite of its natural and cultural heritage but because of it. A necessary balance must be reached between growth and the protection of the transcendent qualities that make a place unique. Private landowners desiring to protect their properties have been aided in that regard by the their state legislatures, and by the US Congress.

Tax incentives for voluntary land protection allow private landowners to protect the unique natural and cultural qualities of their property, while deriving tangible financial benefits from doing so. The following is a description of the state tax incentives available to landowners in the North Carolina, South Carolina and Georgia. These tax incentives are in addition to federal tax incentives, which will be discussed in a future issue of the Chattooga Quarterly.

Following the discussion of state tax incentives is a brief description of a very important bill that is pending before the U.S. Senate Finance Committee. This bill would make available to middle income landowners the ability to preserve lands that they would otherwise be unable to.

North Carolina Income Tax Credit

In 1983, the North Carolina General Assembly established a tax credit for qualified conservation donations. The credit allows conservation donors to deduct 25% of the fair market value of the conservation gift from the donor’s state income tax and other taxes imposed, such as gift or estate taxes. Although there is a credit limitation of $250,000 for individuals and $500,000 for corporations, a donor may take a separate credit for each conservation gift donated. Any unused portion of the credit can be carried over for the next five years. Beyond that, any unused portion can be claimed as a regular charitable tax deduction. This tax credit takes the place of an ordinary deduction for charitable contributions.

The property to be restricted must be formally appraised. The donor must give, not sell, the property interest to a local or state government unit or a charitable organization that is qualified to receive and manage property interests for conservation purposes. As well, the donor must apply to the North Carolina Department of Environment and Natural Resources (DENR) for certification that the property meets state requirements for “land conservation purposes.” Although these requirements are different than Internal Revenue Code (IRC) requirements, DENR often construes “land conservation purposes” to be consistent with IRC 170 (h)(4)(A), which clearly defines federal standards.

South Carolina Conservation Incentives Act

The General Assembly of the State of South Carolina has recently amended the Code of Laws of South Carolina, 1976, to include an income tax incentive for voluntary land conservation. This incentive was devised to “protect and preserve natural areas and their traditional uses while paying appropriate deference to property rights, expending no state funds, and keeping property in the private sector and on property tax rolls.”

The amended section of the 1976 code requires that a landowner has qualified for and claimed on their federal income tax return a charitable deduction for a gift of land for conservation, or for a qualified conservation contribution, to be eligible for the state income tax credit. Like North Carolina, South Carolina’s tax incentive comes in the form of a tax credit equal to 25% of the fair market value of the conservation gift. The tax credit is limited to a maximum of $52,000 per year, and to $250 per acre. Despite the fact that the tax credit is substantially less than that allowed in North Carolina ,the South Carolina incentive allows the landowner to carry the unused portion of the credit forward until the full credit is claimed.

Georgia Uniform Conservation Easement Act

The General Assembly of the State of Georgia adopted enabling legislation effective on July 1, 1992 delineating the applicability of conservation easements. Although this legislation does not allow for additional tax incentives as in North and South Carolina, it does entitle the landowner to a revaluation of the encumbered property to reflect the existence of the encumbrance on the next succeeding tax digest in the county. Work is under way to draft legislation that allows for a tax incentive in the state of Georgia.

The Conservation Tax Incentives Act of 1999
§. 808

The Conservation Tax Incentives Act of 1999 was introduced on April 15, 1999 by Senators Jeffords and Chaffee. The purpose of the bill is to amend the Internal Revenue Code of 1986 to provide for tax incentives for the sale of land for conservation purposes. The legislation is a cost-effective, non-regulatory, market-based and fiscally conservative approach to conservation.

§. 808 addresses the problem that many conservation minded landowners are unable to donate land they would like to see protected, because they are not able to take advantage of existing tax-incentives that favor wealthier landowners. Middle income “land rich, cash poor” landowners would have the ability to reduce by 50% capital gains tax on property, or interest in property, sold to a government agency or qualified conservation organization for conservation purposes. The exclusion would give the landowner the ability to conserve the land’s environmental value without sacrificing the financial security it provides.

Senator Jeffords’ remarks upon introduction of the bill made clear that the legislation was intended to justly compensate landowners for the commercial value of their property. Thus, the property being purchased would be assessed at its unencumbered, full fair market value. At the time of purchase, the purchaser is required to provide a letter of intent stating the purchasers’ intent that the acquisition will serve such conservation purposes as protection of fish, wildlife or plant habitat, or provision of open space for agriculture, forestry, outdoor recreation or scenic beauty.

§. 808 also applies to partial interests in land sold for conservation purposes. A landowner could sell a conservation easement on the property, take advantage of the tax provisions in the bill, and have full use of the land subject to the conservation purpose of the easement. For instance, a farmer could sell an easement on his/her property and yet continue to farm the land.

According to the Bill’s sponsors, an estimated 9% annual increase in land protected would result from these tax incentives without any increase in government spending on conservation land acquisition. The provisions of this bill are strictly voluntary, and use conservation purposes and definitions already enacted in the Internal Revenue Code. The bill recognizes landowners stake in protecting their communities’ natural heritage, while allowing them to realize the economic benefits of their investment in land.

§. 808 was sent to the Senate Finance Subcommittee on Taxation, where it “died” with the closing of the 106th Congress. Senator Jeffords’ staff indicates that reintroducing the bill in the 107th Congress is an important priority. Please call the Chattooga Conservancy office to inquire how you can help assure that this bill “lives” through committee and becomes an effective tool for conservation.

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