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If you donated an easement to the Maryland Environmental Trust or the Maryland Agricultural Land Preservation Foundation to preserve open space, natural resources, agriculture, forest land, watersheds, significant ecosystems, view sheds or historic properties, you may be eligible for a tax credit.
You may be eligible for the credit if:
- the easement is perpetual;
- the easement is accepted and approved by the Board of Public Works; and
- the fair market value of the property before and after the conveyance of the easement is substantiated by a certified real estate appraiser.
The credit is equal to the difference in the fair market values of the property reduced by payments received for the easement. The credit amount is limited to the lesser of the individual's state tax liability for that year of the maximum allowable credit of $5,000, per owner, who qualifies to claim the credit. The credit can be claimed on Maryland forms 502, 504, 505 or 515.
If the property is owned jointly by more than one individual such as a husband and wife, each individual owner is entitled to the credit based on their percentage of ownership. Individual members of a pass-through entity are not eligible for this credit.
In the case of a joint return, each spouse must calculate their own state tax liability for limitation purposes. Use the rules for filing separate returns in Instruction 8 of the Maryland resident tax booklet. In the case of a fiduciary return, the fiduciary will complete the column for Taxpayer B only.
If the individual's allowable credit amount exceeds the maximum of $5,000, the excess may be carried forward up to 15 years or until fully used. Complete lines 1-7 of Part F on Form 502CR. If you itemize deductions, see Instruction 14 in the Maryland resident tax booklet.
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