FREQUENTLY ASKED QUESTIONS FOR SELLERS

What are conservation easements?
Conservation easements are agreements between landowners and a qualifying organization that restrict development of real property. These documents vary and are unique for each landowner. They are used to preserve land in perpetuity and they are designed specifically to protect the conservation values of a property, such as wildlife habitat, agricultural lands, outdoor recreation areas for the public, scenic vistas or historic lands or structures.

What are conservation easement tax credits?
Donors of conservation easements are eligible for conservation easement tax credits under Colorado law. These are credits that may be used against Colorado state income taxes owed. Conservation easement tax credits may be used by the donor over a 20 year period, transferred to other Colorado taxpayers, or, in years of budget surplus, refunded by the State to the donor.

What is the maximum credit amount I can receive for my donation?
As of 2007, donors of conservation easements can receive tax credits at the rate of 50% of their donation value. For example, a $400,000 donation will yield $200,000 in state income tax credits. The maximum credit that a landowner can earn in one year is $375,000 (based on a $750,000 donation).

How do I know the value of my donation?
The value of a conservation easement tax credit is based on the appraised value of the conservation easement. A qualified appraiser will determine how much your land value has decreased as a result of placing conservation easement restrictions on your property by considering the value of the property before the conservation easement restrictions and the value after the restrictions. For example, assume you own a property that could be sold for $600,000 today. If you placed a conservation easement on your property that limited its use to agriculture with one house, its value today might only be $400,000. In this case, you have reduced the value of your property by $200,000 by restricting its use through a conservation easement and you have $200,000 in donation value.

How can conservation easement tax credits be sold?
Colorado law provides that donors of conservation easements may transfer their tax credits to other Colorado taxpayers. You may sell your credits by yourself or through a tax credit facilitator such as Tax Credit Connection, Inc.

What are the benefits of selling a credit?
Donors of conservation easements may sell their credits and receive cash payments for their credits. Even with a discount on the credit amount, this will often be more favorable as it could take the donor many years to use his/her credits. Donors may sell all of their credits or keep some for themselves.

How much money will I receive for selling my tax credits?
Sellers will receive 80% of the value of their tax credits in 2008. For example, if a Seller wants to sell $200,000 worth of tax credits, that Seller will receive $160,000 in cash.

Who can sell a credit?
A Colorado taxpayer who donated a qualifying conservation easement and does not have any unused credits from a prior year's easement donation.

What is the smallest tax credit I can buy or sell?
Tax Credit Connection, Inc. will assist with transfers of credits in minimum values of $10,000.

When can I sell a credit?
You can sell your tax credits as soon as you have completed your donation and received all of the required documentation. Tax Credit Connection, Inc. will then review all of your documents to make sure everything is in order. In order for your buyers to use your credits against their 2008 taxes, you will need to sell your credits by April 15, 2009. Regardless of when you sell your credits, you will still receive the full 80%, so there's no reason to wait! Please see our Registration Form for our complete price list.

Are there requirements for the conservation easement donation to qualify?
To qualify, a conservation easement donation must meet certain federal and Colorado requirements. The conservation easement must be donated to a qualifying 501(c)(3) non-profit entity or governmental unit. The conservation easement must be perpetual and meet certain other standards. A qualified appraisal detailing the reduction in value due to the conservation easement is also required.

How do I register?
Simply download the appropriate forms from our Registration page, fill them out and return to Tax Credit Connection, Inc.

For more information see our Articles page.

Ariel Steele
Tax Credit Connection, Inc.
2919 W. 17th Avenue, Suite 201, Longmont, CO  80503
303-774-8127 (phone) 303-682-3275 (fax)

ariel@taxcreditconnection.com

The information provided in this website is for general purposes only. Tax Credit Connection, Inc. does not provide legal advice. Interested buyers and sellers should consult their own legal and tax or financial counsel for information on their specific circumstances and advice on the legal consequences of buying or selling a Colorado conservation easement income tax credit. AlthoughTax Credit Connection, Inc. has used best efforts to ensure that the information provided on this site is accurate and reliable, we do not guarantee that it is fully correct or complete in every respect.

 © 2006 Tax Credit Connection