2010 Changes to the N.C. Conservation Tax Credit

fee simple gifts to private organizations and local governments

In July 2010, North Carolina clarified the requirements for donations of real property to qualify for a conservation tax credit under N.C.G.S. §§ 105 130.34, 105 151.12. (HB 1829) This legislation became effective on August 2, 2010. For donations made after this date to qualify for the tax credit, the interest in real property must be,

donated in perpetuity for one of the qualifying uses listed in this subsection and accepted in perpetuity for the qualifying use for which the property is donated…

Two possible options for complying with the clarified rules follow.

OPTION 1: Notice of Acceptance

A fee simple donation of land to a private organization or local government may qualify for the N.C. Conservation Tax Credit if both of the following conditions are met:

1. the managing entity or board approves a resolution to accept the gift and the resolution incorporates the language of the Notice of Acceptance of Property for Conservation Values; and,
2. the recipient, immediately upon receiving the donation, records a Notice of Acceptance of Property for Conservation Values.

• Non-profit Notice of Acceptance Template
• Local Government Notice of Acceptance Template

The donor should include a copy of the recorded Notice with their conservation tax credit application to the Department of Environment and Natural Resources, as well as the board resolution. Prior to issuing a certification letter, the Department will review the board resolution and Notice.

OPTION 2: Covenant or Easement

Other options are available to donors and recipients of real property that will allow gifts to be protected in perpetuity. These options include placing restrictive covenants that preserve the public benefits of the land in perpetuity or encumbering the land with a conservation easement that preserves the public benefits of the land in perpetuity. If a donor/recipient wishes to take these options, before the donor applies for the tax credit, a third-party, also qualified to hold conservation easements, must take receipt of any subsequently created interest.

Depending on the specific circumstances of the transaction, one of these options may be more appropriate. Potential donors and recipients are encouraged to contact the Conservation Tax Credit program with questions. Before finalizing a conservation donation, potential donors should consult their own legal and tax advisors.

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