Freqeuntly Asked Questions
Conservation easements preserve open space,
farmland and historic sites.




FREQUENTLY ASKED QUESTIONS FOR SELLERS

leaf What are conservation easements?
Conservation easements are legal documents that restrict development of real property. They are flexible instruments and are used to preserve land in perpetuity. They are designed specifically to protect the conservation values of a property, such as as open space, wildlife habitat, agricultural lands, outdoor recreation areas for the public, scenic vistas or historic lands or structures.

leafAre there requirements for the terms of the conservation easement?
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.

leaf 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 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.

leaf What is the maximum credit amount I can receive for my donation?
Starting in 2007, donors of conservation easements will 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).

leaf 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.

leaf 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, LLC.

leaf 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 if it will take the donor many years to use his/her credits. Donors may sell all or just some of their credits.

leaf 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.

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

leaf 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. In order for your buyers to use your credits against their 2007 taxes, you will need to sell your credits by April 15, 2008. Regardless of when you sell your credits, you will still receive the full 83%, so there's no reason to wait! Please see our Registration Form for our complete price list.

leaf Are there requirements for the terms of the conservation easement?
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.

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

lef For more information
See the Colorado Department of Revenue Information Memo.

Ariel Steele
Tax Credit Connection, LLC
P.O. Box 6618 Longmont, CO  80501
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, LLC 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, LLC 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