Over the past several years, the pace of land conservation in Colorado has slowed due to the lack of sufficient incentives and uncertainty in the existing tax credit structure and the State’s commitment to the program. This changed on May 6, 2015, with the passage of Senate Bill 206 by the Colorado State Legislature.
This bill increases the incentive for landowners around the state to preserve ranches and farms through conservation easements. Once signed by the Governor, the bill will provide up to $1.5M in tax credits to landowners who preserve their farms and ranches. This new legislation will increase the pace of land conservation in the state and confirms Colorado’s leadership in promoting land preservation in the U.S.
Effective retroactively starting January 1, 2015, the bill will increase tax credits throughout the state by raising the cap for donated easements. For example, large landowners who donate a $3 million conservation easement will now earn up to $1.5M in Colorado tax credits. They will receive 75% of the first $100,000 of their fair market value of the easement and 50% of the value above that amount up to a total credit of $1.5 million. In the past, the maximum credit was $375,000 for every donation of $750,000 or more. This did not incentivize the protection of larger landscapes as owners were forced to phase donations over a period of at least 4 years to reap the same benefits of the recent legislation ($375k x 4=$1.5 million). In addition, phasing conservation easements is very cumbersome as it increased the overall transactions costs by fourfold, and with average costs of $50,000 per transaction, this could reach $200,000 for phased easements. Phasing also increased the complexity of appraisals and lead to increased oversight by taxing authorities.
Mirr Ranch Group represents sellers and buyers of conservation properties throughout the West and in South America and understands the complexity of these transactions. Owner and ranch broker Ken Mirr served as the President of the Board of Colorado Coalition of Land Trusts (CCLT) for 6 years, and would like to thank CCLT, the bill sponsors, and all who assisted with this effort.
“Colorado really is at the forefront in assisting Colorado ranchers and farmers in incentivizing them to protect their unique landscapes and way of life,” explained Mirr.