Donations of open-space easements that meet federal tax code requirements may entitle the donor to federal income tax deductions. For tax year 2025 and thereafter, the deduction is limited to 50% of adjusted gross income, which if not used up in 2025, may be carried forward at 50% of adjusted gross income for an additional fifteen years or until the donation is fully expended, whichever comes first. In addition, a farmer or rancher who receives in 2025 or thereafter more than 50% of adjusted gross income from the trade or business of farming or ranching is eligible for a tax deduction of 100% of adjusted gross income with the same carry forward right. IRS Form 8283 must be filed to obtain this deduction. Form 8283 requires attachment of a copy of the appraisal, an appraiser’s declaration, VOF’s acknowledgement of the gift, copies of the deed as recorded and the baseline documentation report. The full appraisal will have to be shared with VOF when Form 8283 is submitted to VOF for its signature.
Reduction in federal charitable deduction: Treasury Regulations, effective August 28, 2018, reduced the federal charitable deductions for gifts of qualifying open-space or conservation easements by the amount of the land preservation tax credit (40% of the easement value). For example, if a landowner gives VOF an open-space easement with an easement value of $500,000, the state tax credit would be $200,000 and the federal deduction would be reduced from $500,000 to $300,000.