GREAT NEWS FOR LANDOWNERS! For conservation easements granted on or after January 1, 2021, the tax credit amount is calculated at 90% of the donated value up to a maximum credit of $5 million per donation, issued in increments of $1.5 million per year.
SELLING A TAX CREDIT. Selling a tax credit is generally a two-step process: First, register with Conservation Tax Credit Transfer. Call us at (303) 988-1700 to register. Second, apply for and receive your tax credit certificate through the Division of Conservation.
As part of our service, we conduct a thorough due diligence review of all of your donation documents to ensure that your donation meets all state and federal laws, regulations, and notices. We will assist with any required changes for compliance, if needed, and assist you with submitting the application for a seamless process.
TAX CREDIT CERTIFICATES: The Colorado Division of Conservation administers the conservation easement tax credit program. Landowners are required to apply through the Division for a tax credit certificate in order to receive, claim, sell or use a tax credit.
Tax Credit Applications:
Tax credit certificates are issued by the Division of Conservation on a first come, first served basis. Tax credit applications are submitted online through the Division of Conservation, along with a fee. The application fee to the Division is subject to change each year. The current application fee payable to the Division is $10,000. Please check with CTCT for current fees.
We work with landowners to prepare and submit the tax credit application on your behalf. We review the application with you and upon your approval, submit the application to the Division.
Once the application and fee are submitted, the Division issues the landowner a “deemed complete letter,” which reserves the credit amount from the available cap and places the application in the Division’s queue.
The Division has 120 days to review the tax credit application and make a determination to issue the tax credit certificate or request additional information.
Preliminary Advisory Opinion:
Prior to applying for a tax credit, landowners have the option to receive an opinion from the Division as to the qualification of the proposed easement transaction. This is done through a Preliminary Advisory Opinion (PAO) application. The PAO application is completed in a similar manner as the Tax Credit Application and is an additional fee.
The PAO Application is purely optional and is utilized when there is an unusually complex transaction or uncertainty if the easement transaction would qualify for a tax credit. The PAO is requested for either the conservation purposes, the appraisal or both. We work with landowners to prepare and submit the PAO application to the Division as part of our service.
TRANSFER PROCESS
Once your tax credit certificate is issued and you are ready to sell, CTCT will match your credit with a qualified credit buyer. Both sellers and buyers execute CTCT’s Agreement to Purchase/Sell, along with a Written Notice of Transfer. Transfers are completed by delivering signed copies of the Agreement, distributing funds, and filing the Written Notice of Transfer with the Division of Conservation.
TAX FILING PAPERWORK
After your credits are sold, we provide the required paperwork documenting the credit transfer and sale for both you and the buyer(s) to file with your Colorado state income tax return. This includes completing the Department of Revenue (DR) Forms 1305, 1305E, 1305F, and 1305G, as applicable.
GOING MARKET RATE
Sellers receive a percentage of the face value of the credit based on the market transfer rate. The supply of tax credits available in the market affects the rate. Please contact CTCT about the current market rate. (303) 988-1700.
Click the video below to hear a landowner’s perspective on conservation easements and the tax credit process.