South Carolina Lawyer
Vol. 12, No. 5, Pg. 14.
South Carolina Conservation Incentives Act An Innovative Approach to Conservation
14SOUTH CAROLINA CONSERVATION INCENTIVES ACT An Innovative Approach to ConservationBy Scott Barnes and Chip CampsenThe South Carolina Conservation Incentives Act (H3782, Act 283) is an innovative conservation incen- ve with which tax and real estate practitioners should become familiar. With certain limitations, the Act provides a state income tax credit for voluntary donations of land for conservation and for conservation easements that qualify as charitable deductions under federal tax law. Signed into law on May 19, the Act becomes effective on June 1, 2001.
Donations of land for conservation and conservation easements are typically made to nonprofit conservation organizations such as The Nature Conservancy, Ducks Unlimited (Wetlands America Trust) and the Lowcountry Open Land Trust. A conservation easement is a type of negative easement that prohibits the land upon which the easement is placed (the servient estate) from being developed in a fashion that is inconsistent with the terms of the easement. Conservation easements are enforceable by the nonprofit organizations to which they are conveyed and typically permit continuation of traditional rural land uses such as farming, timbering, hunting, fishing and game management. Their conservation effect is accomplished through prohibitions or limitations on subdivision and development.
16Current federal and state tax law allows a deduction for donations of land for conservation and qualifying conservation easements as charitable contributions to nonprofit organizations. The amount of the deduction is the value of the donation as established by an appraisal. The tax credit provided for by the Conservation Incentives Act is in addition to this deduction and is equal to 25 percent of the value of the donation. An important aspect of the tax credit is its transferability. This transferability enables donors to realize the credit provided for by the Act and then either recognize the credit on their own returns or sell the credit if they so desire.
Donations of land for conservation and conservation easements have typically been made by higher income taxpayers who quickly recognize benefits of large deductions for charitable contributions as offsets to taxable income. The tax credit established by the Conservation Incentives Act is an additional and powerful incentive for all owners of rural land to voluntarily place easements on their property. However, the transferability of the new tax credit creates an incentive for a whole...