A tax break that’s easier to live with

On the surface, I’m like most members of the middle class: hearing about tax breaks for the wealthy generally gets my blood boiling. We’ve all heard stories of individuals making a million dollars a year hiding their income in offshore tax havens or by playing the U.S. tax code like a violin — paying less taxes than a teacher or policeman.

But I was forced to admit that as a sportsman, one of those big-ticket tax breaks seems to make sense: a conservation easement. If there’s one thing that sportsmen, especially hunters, really hate with a passion, it’s the dirty “D” word: development. And that’s something a conservation easement and tax break that comes with it prevents.

If that makes it the lesser of two evils, okay.

Because I’ve got a long-time fishing buddy with connections, I went hog-hunting on the Patriot Plantation in Williamsburg County a couple of months ago.

The 1,880-acre tract is for sale, and Mark McDonald of Advance Land and Timber in Lexington is handling it. He said that, without the prospect of a conservation easement and the resulting tax credit, getting rid of a big piece of land — and keeping it in one piece — would be a pipe dream.

That situation spells doom for a lot of South Carolina’s bigger properties, especially those hunting meccas in the Lowcountry. Whether they’re owned and operated as commercial hunting businesses or leased by a group of hunters, the only way big tracts of land might be saved for years to come is with conservation easements.

“Conservation easements and the tax credits they carry will have a big effect on hunting plantations,” McDonald said. “Good hunting comes from good management, and that means larger tracts of land.

“The economy, hard times, are splitting land up, and a conservation easement might be the saving grace for people with large tracts of land.”

A conservation easement is an agreement that a landowner enters into with a “land trust” to eliminate the possibility of development on a property. The landowner gets an appraisal of what the property would be worth when fully developed — either as a golf-course or a housing development, for example — and an appraisal of what the property is worth in its current state. The difference is the basis for the tax credit the landowner gets for signing a contract never to develop the property. Conservation easements are passed from landowner to landowner.

“It’s the main tool I’m working with right now to sell big tracts of land without having to split them up,” McDonald said. “And one of the big advantages of having an easement is the tax credit.”

If a 2,000-acre tract of land might bring $10 million, having a conservation easement that defines the land’s potential at $12 million would carry a tax credit of $2 million that could be split up over 15 years.

Instead of having to divide up the land to get it sold, a broker might be able to sell it at a discount if the seller keeps the tax credit, or he might get closer to his asking price if the tax credit goes to the buyer.

“It’s a great tool for someone who wants to buy or sell a big piece of property,” McDonald said. “The main idea is to keep the land together.”

Conservation easements can have a similar effect on much smaller pieces of property, as long as a potential for future development can be avoided and rewarded. And while you may have to bite your lip for a few seconds, you have to admit that keeping large properties together has a beneficial effect on wildlife and the sportsmen who enjoy it.