Land Preservation Tax Credit
This tax credit is for taxpayers that convey land or interest in land located in Virginia to a public or private agency eligible to hold such land or interests for conservation or preservation purposes. The conveyance must be in perpetuity.
Credits for conveyances made in 2007 and thereafter are equal to 40% of the land’s fair market value. All fair market valuations must be substantiated by a “qualified appraisal” and prepared by a “qualified appraiser,” as those terms are defined under applicable federal law and regulations governing charitable contributions. Beginning with calendar year 2015, the maximum amount of credits that may be issued in a calendar year may not exceed $75 million. For taxable years 2009, 2010, and 2011, the total amount of credit per taxpayer per taxable year was limited to $50,000 or the total tax liability, whichever was less. For the taxable years 2012, 2013 and 2014, the credit limit per taxpayer per taxable year was $100,000. For the taxable years 2015, and thereafter the credit limit per taxpayer per taxable year is $20,000. However, for any fee simple donation of land conveyed to the Commonwealth on or after January 1, 2015, the amount of the credit claimed shall not exceed $100,000 for each taxable year, provided that no part of the charitable contributions deduction under § 170 of the Internal Revenue Code related to such fee simple donation is allowable by reason of a sale or exchange of property. For taxpayers affected by the credit reductions for taxable years 2009, 2010, 2011, and 2015 and thereafter, an additional 3-year carryforward will be added to the credit. Any unused credit not affected by the usage limits will retain the original carryforward periods (5 years for donations originating prior to January 1, 2007 and 10 years for donations originating on or after January 1, 2007).
Any taxpayer holding a Land Preservation Tax Credit that originated on or after January 1, 2002, may transfer unused but otherwise allowable credit for use by another taxpayer on Virginia income tax returns. Transfers and pass-through allocations derived from donations recorded on or after January 1, 2007, are generally subject to a 2 percent transfer fee. See Schedule A of Form LPC-1 or Form LPC-2 for further information.
A subtraction is allowed for any gain or income recognized by a taxpayer on the application of a Land Preservation Tax Credit against a Virginia income tax liability, to the extent the gain is included in and not otherwise subtracted from federal adjusted gross income. The transfer of the credit and its application against a tax liability shall not create gain or loss for the transferor or the transferee.
Before claiming the credit, complete and file Form LPC1 and/or Form LPC-2 with the Department of Taxation at least 90 days before filing your income tax return. Additionally, applicants filing for tax credits of $1 million or more must apply to the Department of Conservation and Recreation to receive verification of the conservation value. The Department of Taxation will issue a letter acknowledging the amount of the credit. For assistance, contact the Virginia Department of Taxation, Tax Credit Unit, P. O. Box 715, Richmond, VA 23218-0715, or call (804) 786-2992.