If you own a tract of undeveloped land, there is a lesser known option you can take advantage of that has significant tax benefits--a land conservation easement. Basically, a conservation easement protects land for future generations while allowing owners to retain many private property rights and to live on and use their land.
If you use the easement to allow a non-profit involved in conservation to protect all or a portion of your land, the difference of the value of the land before and after the easement is in place is considered a charitable contribution and can be deducted from your taxes.
In addition, in Virginia you can get a tax credit equal to 40% of the amount of this charitable contribution.
In the case of land that would have had quite a bit of value if it was developed commercially, these tax credits can be quite large--so large that a person might not even be able to use all of it in their lifetime. Luckily, you can actually sell tax credits, and the money you make from selling them is considered capital gains income, which is taxed at a much lower rate than other types of income.
For more information about conservation easements and assistance with all of the paperwork associated with them, contact our office.