North Carolina recognizes the importance of land preservation to its economy. It offers a generous tax credit program to promote private preservation.

The NC Conservation Tax Credit is equal to 25% of the fair market value of interest in real property donated for conservation purposes, per G.S. 105-151.12 for individuals and G.S. 105-130-34 for corporations.

• The credit is capped at $250,000 for individuals and $500,000 for corporations.
• Through December 31, 2005, the maximum dollar limit applicable to a partnership, applies separately to each partner.
• It is deductible to the extent of tax liability and may be carried forward for up to 5 years.
• The credit is non-transferable. Any unused portion is lost after the sixth year or at the death of the donor.
  • Any portion of the fair market value of a donation that is not eligible or taken for credit may be considered as a charitable contribution under G.S. 105-130.
• Land dedicated under local government regulation or ordinance, or dedications made to increase building density levels are not eligible.
• Individuals may claim a deduction and credit. Corporations may not claim both.

Qualifying for federal deductions under Section 170(h) does not automatically qualify a donor for state credit. Submit applications to the NC Department of Environmental and Natural Resources:

NC Conservation Tax Credit Program
Telephone (919) 715-4191
http://www.enr.state.nc.us/conservationtaxcredit

The conservation purpose is slightly different for the NC tax credit. The donation must serve “A Public Benefit”. This can include:

• Public Beach Access and Use
• Public Access to Public Waters
• Public Access to Public Trails
• Fish & Wildlife Conservation
• Other Similar Land Conservation Purposes
  • Easements without public access often qualify under the Fish & Wildlife Conservation and “Similar Land Conservation Purposes” categories.

The qualifying recipient is defined more strictly for the NC tax credit program. Section 170(h) requires the easement holder to be a government entity or public charity with the ability to enforce the restrictions. NC requires the organization to be a qualified “holder," NCGS 121-35(2). The organization’s purpose must be related to conservation or preservation as defined in the statute.

The Open Space Protection Collaborative provides information to promote the proper use of easements and other conservation tools. This information is not intended to be tax or legal advice; individuals should consult their own legal and financial advisers before drafting, executing or donating a conservation easement.