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CCT Programs & Accomplishments
CCT Initiatives
Colorado Conservation Easement Tax Credit Program
Established in 2001, the Conservation Easement Tax Credit Program allows landowners who donate a conservation easement on their land to receive a credit on their Colorado state income tax of up to $260,000. If the landowner cannot use the credit, he/she can sell it to someone who can. In general, sellers receive 80% of the value of the credit and buyers pay 90%, with the remainder going to the broker and to conservation organizations. The program had a record year in 2003, with more than $40 million in tax credit transactions completed and tens of thousands of acres preserved. In three years, this has become the largest conservation program in Colorado.
CCT has been successful in recruiting buyers of credits, generating positive press coverage for the program, maintaining quality control, and working with credit buyers to direct their tax savings to conservation projects. CCT worked with groups to form an advisory board for the largest credit broker in the state to ensure the quality of the program.
Tax Credit Program Details
Colorado’s Conservation Easement Tax Credit Program is the first of its kind in the nation. It has become the largest conservation program in the state, protecting tens of thousands of acres of land while saving taxpayers millions of dollars each year.
How the Tax Credit Program Works
A landowner places a conservation easement on his/her property, permanently restricting development on the land. By doing this, the landowner receives a state tax credit of up to $260,000. If he/she cannot use the credit (i.e., does not have a high enough taxable income), he/she can sell the credit, at a reduced rate, to someone who can use it. Buyers pay as little as 85% of the face value for the credit, thereby saving 15% on state income taxes.
Example
John donates a conservation easement on his property to a qualified conservation organization or agency. For that donation he receives a Colorado income tax credit worth $260,000. John’s taxable income is only $75,000, so he sells the credit. Through a conservation tax credit broker, John sells his credit for 80% of the value, or $208,000, to a tax payer(s) whose income is sufficient to use the credits.
Larry has a taxable income of $2.2 million and will have to pay $100,000 in state income taxes. Through a tax credit broker, he purchases $100,000 in tax credits, but actually pays $85,000 (85% of the value of the credit) when he purchases it through CCT. Thus, Larry saves $15,000 on his state income taxes by buying tax credits.
The Savings
Estimated savings you can expect on your income taxes if you purchase conservation easement tax credits:
Your Taxable Income (adjusted gross income) |
Your State Income Tax Obligation |
Income Tax Savings if You Purchase Credits |
$550,000 |
$25,000 |
$3,750 |
$1.1 million |
$50,000 |
$7,500 |
$2.2 million |
$100,000 |
$15,000 |
$5.5 million |
$260,000 |
$39,000 |
The Benefits
Savings for you: When you purchase credits, you buy them for less than their face value, thereby saving money on your state income tax bill.
Funds for the landowner: Your purchase creates cash flow for the landowner donating the easement, oftentimes enabling him or her to remain on the property and continue a ranching business.
Protection of Colorado’s special places: The purchase of tax credits facilitates the donation of a conservation easement, thereby preserving the land in perpetuity. More than $40 million in credits were processed in 2003, protecting tens of thousands of acres of land. Many buyers of credits donate back their savings to the Colorado Conservation Trust to protect additional land. This allows people to make significant cash donations to conservation without any out of pocket expenses.
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