Wednesday, March 19, 2008

Only Two Things Are Certain

Death and Taxes. Isn't that the way the saying goes? We did our taxes last night. Always painful but not nearly as painful this year as I thought it would be.

Colorado has a conservation easement tax credit transfer program that we took advantage of this year. I'm not an accountant so forgive me if I mess up on my explanation, but my understanding of it is that individuals can voluntarily place a conservation easement on their land (usually ranch land). A conservation easement prohibits development on the land. In return the land owners get tax credits related to the value of the land. Most people can't use the entire tax credit, so the state allows them to sell it to other individuals.* I think we purchased ours at roughly 85cents on the dollar. We can then apply those credits to our own taxes and save on our taxes. (if you are like me, that is confusing. As an example, we can pay $850 for a $1000 credit, saving us from paying the government $250. See how that works?) It is supposed to be a win-win-win situation. We save money on our taxes, the landowners get financially reimbursed for land they can never develop, and the state has more conservation land (and really doesn't that benefit us all?).

Last week I heard part of a story on NPR about the Colorado conservation land tax credit and how many landowner's are overvaluing their land and getting more tax credits to sell. Apparently the state is really trying to crack down on it (fortunately we worked with very reputable individuals on our purchase). I wanted to hear the whole story and share it with Matt, but I can't find it in the NPR archives. While searching, I did find these two stories which I thought were really interesting. Just food for thought.

In Land Conservation, "Forever" Might Not Last
Research Studies Unintended Effects of Conservation

*If you want a better, more official explanation check out this article.


The Cole Mine said...

Oh no, Mmy mommy brain hurts now!!

Good info though - things to think about for sure! Thank you for passing this along.

N. & J. said...

Interesting. I live in Colorado and had never heard of that. Thanks for the info.