There are many things to keep in mind as you work through the process of determining your land’s future.
Professional advice
Always consult a professional tax and/or legal adviser before making major financial decisions or donations. This website is a helpful start, but tax laws are complex and each situation is unique. While INHF and other experienced conservation groups can help lay out your options, they are not tax professionals and cannot legally represent your interests in these transactions.
Does my land fit the criteria?
Your gift must provide lasting conservation benefits in order to qualify for income tax deductions or income tax credits that are specific to conservation gifts of land. With your adviser, make sure your gift meets the requirements of IRC Section 170 and accompanying Treasury Department regulations, and/or any other federal or state requirements.
The gift’s value
Don’t overstate your gift! Due to abuses of conservation tax deductions in other states, the IRS is particularly watchful for charitable deductions based on inflated appraisals, inflated conservation benefits, insider deals and other suspicious transactions. Penalties can be severe.
Appraisal
If you claim a deduction or credit that exceeds $5,000, a qualified appraisal is required.
- As the donor, you are responsible for determining the value of the donation.
- You will need to hire a qualified appraiser who follows the Uniform Standards of Professional Appraisal Practice (USPAP).
- The appraisal must be completed near the time of your gift:
- Completed not earlier than 60 days prior to the date of contribution, or
- completed after the gift, establishing value as of the date of the gift, or
- The appraisal must be completed before the due date for the tax return on which the deduction is first claimed.
See IRS Publication 561 for more about determining gift value.
Claiming a deduction
IRS tax form 8283 is used to claim a federal deduction for a gift of land or land value. An additional Supplemental Statement is also required for federal deductions of conservation easement donations.
Form 8283 is signed first by the appraiser, then it is signed by the receiving organization and returned to you. You should allow plenty of time for each party to review and sign this form before your filing deadline. Your Form 8283 needs all original signatures (not scanned or emailed forms/signatures).
Many receiving organizations (including INHF) request a copy of the appraisal and Supplemental Statement to review before signing Form 8283. Their staff will use their general knowledge and common sense to make a general assessment about whether the appraised value and the statement are credible. They have an ethical responsibility to avoid participating in projects where they have significant concerns about the tax deduction being claimed.
Solid appraisal and substantiation are important
Technical failures in the appraisal and substantiation documents have been known to lead to IRS denial of charitable conservation contributions, and substantial penalties can be assessed as well. Review your appraisal, and be sure you and your legal and tax advisers review and understand the requirements of IRC §170 and the accompanying Treasury Department regulations.
Iowa tax form IA 148 is used to claim the Iowa Charitable Conservation Contribution Tax Credit.
IA 148 does not require signatures from your appraiser or the receiving organization — but you will need to attach a copy of your signed federal Form 8283 with your state return.
Keep your acknowledgement letter
Your receiving organization must provide an official acknowledgment letter to you very soon after your gift is completed.
The IRS requires you to keep the original acknowledgement letter with your tax records as your official acknowledgment of receipt of your gift. It’s good practice to attach a copy of this acknowledgement letter to your fully executed IRS 8283 tax form.