                                 CODE OF VIRGINIA

LAND PRESERVATION TAX CREDITS FOR INDIVIDUALS AND CORPORATIONS (§ 58.1-512)

A. 1. For taxable years beginning on or after January 1, 2000, there shall be
allowed as a credit against the tax liability imposed by §§ 58.1-320 and
58.1-400, an amount equal to 50 percent of the fair market value of any land or
interest in land located in Virginia that is conveyed for the purpose of
agricultural and forestal use, open space, natural resource, and/or biodiversity
conservation, or land, agricultural, watershed and/or historic preservation, as
an unconditional donation by the landowner/taxpayer to a public or private
conservation agency eligible to hold such land and interests therein for
conservation or preservation purposes. For such conveyances made on or after
January 1, 2007, the tax credit shall be 40 percent of the fair market value of
the land or interest in land so conveyed.

   2. a. If the Commonwealth or an instrumentality thereof operates a facility on
   a conveyance, including charging fees for the use of such facility, such
   operation shall not disqualify the conveyance from eligibility for the tax
   credit, so long as any fees are used for conservation or preservation
   purposes.
   				b. If the Commonwealth or an instrumentality thereof enters into an
   agreement with a third party to lease or manage a facility on a conveyance,
   the fact that such third party is operated primarily as a business with intent
   for profit shall not disqualify the conveyance from eligibility for the tax
   credit, so long as such agreement is for conservation or preservation
   purposes.

B. The fair market value of qualified donations made under this section shall be
determined in accordance with &#xA7; 58.1-512.1 and substantiated by a
&#8220;qualified appraisal&#8221; prepared by a &#8220;qualified
appraiser,&#8221; as those terms are defined under applicable federal law and
regulations governing charitable contributions. The value of the donated
interest in land that qualifies for credit under this section, as determined
according to appropriate federal law and regulations, shall be subject to the
limits established by United States Internal Revenue Code &#xA7; 170(e). In
order to qualify for a tax credit under this section, the qualified appraisal
shall be signed by the qualified appraiser, who must be licensed in the
Commonwealth of Virginia as provided in &#xA7; 54.1-2011, and a copy of the
appraisal shall be submitted to the Department. In the event that any appraiser
falsely or fraudulently overstates the value of the contributed property in an
appraisal that the appraiser has signed, the Department may disallow further
appraisals signed by the appraiser and shall refer the appraiser to the Real
Estate Appraiser Board for appropriate disciplinary action pursuant to &#xA7;
54.1-2013, which may include, but need not be limited to, revocation of the
appraiser&#8217;s license. Any appraisal that, upon audit by the Department, is
determined to be false or fraudulent, may be disregarded by the Department in
determining the fair market value of the property and the amount of tax credit
to be allowed under this section.

C. 1. The amount of the credit that may be claimed by each taxpayer, including
credit claimed by applying unused credits as provided under subsection C of §
58.1-513, shall not exceed $50,000 for 2000 taxable years; $75,000 for 2001
taxable years; $100,000 for each of 2002 through 2008 taxable years; $50,000 for
each of 2009, 2010, and 2011 taxable years; $100,000 for each of 2012, 2013, and
2014 taxable years; $20,000 for each of 2015, 2016, and 2017 taxable years; and
$50,000 for 2018 taxable years and for each taxable year thereafter. However,
for any fee simple donation of land conveyed to the Commonwealth on or after
January 1, 2015, the amount of the credit claimed shall not exceed $100,000 for
each taxable year, provided that no part of the charitable contributions
deduction under § 170 of the Internal Revenue Code related to such fee simple
donation is allowable by reason of a sale or exchange of property. In addition,
for each taxpayer, in any one taxable year the credit used may not exceed the
amount of individual, fiduciary or corporate income tax otherwise due. Any
portion of the credit that is unused in any one taxable year may be carried over
for a maximum of 10 consecutive taxable years following the taxable year in
which the credit originated until fully expended. A credit shall not be reduced
by the amount of unused credit that could have been claimed in a prior year by
the taxpayer but was unclaimed. For taxpayers affected by the credit reduction
for taxable years 2009, 2010, 2011, and 2015 and thereafter, any portion of the
credit that is unused in any one taxable year may be carried over for a maximum
of 13 consecutive taxable years following the taxable year in which the credit
originated until fully expended.

   2. Qualified donations shall include the conveyance of a fee interest in real
   property or the conveyance in perpetuity of a less-than-fee interest in real
   property, such as a conservation restriction, preservation restriction,
   agricultural preservation restriction, or watershed preservation restriction,
   provided that such less-than-fee interest qualifies as a charitable deduction
   under &#xA7; 170(h) of the United States Internal Revenue Code of 1986, as
   amended.
   				The Department of Conservation and Recreation shall compile an annual
   report on qualified donations of less-than-fee interests accepted by any
   public or private conservation agency in the respective calendar year and
   shall submit the report by December 1 of each year to the Chairmen of the
   House Committee on Appropriations, House Committee on Finance, and the Senate
   Committee on Finance and Appropriations. In preparing such report, the
   Department of Conservation and Recreation shall consult and coordinate with
   the Department of Taxation and the Departments of Forestry and Agriculture and
   Consumer Services to provide an estimate of the number of acres of land
   currently being used for &#8220;production agriculture and silviculture&#8221;
   as defined in &#xA7; 3.2-300 that have been protected by qualified donations
   of less-than-fee interests. This report shall include information, when
   available, on land qualifying for credits being used for &#8220;production
   agriculture and silviculture&#8221; that have onsite operational best
   management practices, which are designed to reduce the amount of nutrients and
   sediment entering public waters. In addition, the report shall include
   information, when available, on riparian buffers, both vegetated/forested
   buffers and no-plow buffers, required by deed restriction on land qualifying
   for credits in order to protect water quality. This information shall be
   reported in summary fashion as appropriate to preserve confidentiality of
   information. Qualified donations shall not include the conveyance of a fee
   interest, or a less-than-fee interest, in real property by a charitable
   organization that (i) meets the definition of &#8220;holder&#8221; in &#xA7;
   10.1-1009 and (ii) holds one or more conservation easements acquired pursuant
   to the authority conferred on a &#8220;holder&#8221; by &#xA7; 10.1-1010.

   3. Any fee interest, or a less-than-fee interest, in real property that has
   been dedicated as open space within, or as part of, a residential subdivision
   or any other type of residential or commercial development; dedicated as open
   space in, or as part of, any real estate development plan; or dedicated for
   the purpose of fulfilling density requirements to obtain approvals for zoning,
   subdivision, site plan, or building permits shall not be a qualified donation
   under this article.

   4. Qualified donations shall be eligible for the tax credit herein described
   if such donations are made to the Commonwealth of Virginia, an instrumentality
   thereof, or a charitable organization described in &#xA7; 501(c)(3) of the
   United States Internal Revenue Code of 1986, as amended, if such charitable
   organization (i) meets the requirements of &#xA7; 509(a)(2) or (ii) meets the
   requirements of &#xA7; 509(a)(3) and is controlled by an organization
   described in &#xA7; 509(a)(2).

   5. The preservation, agricultural preservation, historic preservation or
   similar use and purpose of such property shall be assured in perpetuity. In
   the case of conveyances of a fee interest to a charitable organization that is
   a &#8220;holder&#8221; as defined in &#xA7; 10.1-1009, the credit shall not be
   allowed until the charitable organization agrees that subsequent conveyances
   of the fee interest in the property will be (i) subject to a previous
   conveyance in perpetuity of a conservation easement, as that term is defined
   in &#xA7; 10.1-1009, or subject to the conveyance in perpetuity of an
   open-space easement, as that term is defined in &#xA7; 10.1-1700, or (ii)
   conveyed to the Commonwealth of Virginia or to a federal conservation agency.
   No credit shall be allowed with respect to any subsequent conveyances by the
   charitable organization.

D. The issuance of tax credits under this article for donations made on and
after January 1, 2007, shall be in accordance with procedures and deadlines
established by the Department and shall be administered under the following
conditions:

   1. The taxpayer shall apply for a credit after completing the donation by
   submitting a form or forms prescribed by the Department in consultation with
   the Department of Conservation and Recreation. If the application requests a
   credit of $1 million or more or if the donation meets the conditions of
   subdivision 3 c, then a copy of the application shall also be filed with the
   Department of Conservation and Recreation by the taxpayer. The application
   shall include, but not be limited to:
   				a. A description of the conservation purpose or purposes being served by
   the donation;
   				b. The fair market value of land being donated in the absence of any
   easement or other restriction;
   				c. The public benefit derived from the donation;
   				d. The extent to which water quality best management practices will be
   implemented on the property; and
   				e. Whether the property is fully or partially forested and a forest
   management plan is included in the terms of the donation.

   2. Applications for otherwise qualified donations of a less-than-fee interest
   shall be accompanied by an affidavit describing how the donated interest in
   land meets the requirements of &#xA7; 170(h) of the United States Internal
   Revenue Code of 1986, as amended, and the regulations adopted thereunder. The
   application with accompanying affidavit shall be submitted to the Department
   of Taxation, with a copy also provided to the Department of Conservation and
   Recreation.

   3. a. No credit in the amount of $1 million or more shall be issued with
   respect to a donation unless the conservation value of the donation has been
   verified by the Director of the Department of Conservation and Recreation,
   based on the criteria adopted by the Virginia Land Conservation Foundation for
   this purpose. Such criteria and subsequent amendments shall be exempt from the
   Administrative Process Act (&#xA7; 2.2-4000 et seq.), but the Virginia Land
   Conservation Foundation shall provide for adequate public participation,
   including adequate notice and opportunity to provide comments on the proposed
   criteria. The Director shall act on applications within 90 days of his receipt
   of a complete application and shall notify the taxpayer and the Department of
   Taxation of his action.
   				b. For purposes of determining whether a credit requires verification of
   the conservation value, the credits allowed under this article with respect to
   donations of any other portion of a recorded parcel of land within the
   preceding 11 years shall be aggregated with the credit claimed for the current
   donation. This subdivision shall not apply if (i) all owners of the parcel who
   have been allowed credit for a qualified donation are not affiliated with the
   person or entity seeking credit for the current donation of a different
   portion of the parcel and (ii) in the case of an individual seeking credit,
   the individual has not previously made a qualified donation for any portion of
   the parcel and is not an immediate family member of any such owners.
   				c. If (i) the real property that is the subject of the donation was
   partitioned from or part of another parcel of land and any other portion of
   such parcel, or any land partitioned from such parcel of land, has been
   allowed a tax credit under this article (or an application for tax credit is
   pending) within three years of such donation and (ii) the tax credit that
   would otherwise be allowed to the donor for such donation is at least
   $250,000, then no credit under this article shall be issued with respect to
   such donation described in clause (i) unless the conservation value of the
   donation has been verified by the Director of the Department of Conservation
   and Recreation. The Director shall act on applications within 90 days of his
   receipt of a complete application and shall notify the taxpayer and the
   Department of Taxation of his action. Nothing in this subdivision shall be
   construed or interpreted (a) as allowing additional tax credit for any land or
   interest in land previously conveyed for which tax credit has already been
   allowed under this article or (b) affecting the validity of any tax credit
   allowed under this article for a prior conveyance of any land or interest in
   land.

   4. a. Tax credits shall be issued on a calendar year basis, and in no case
   shall the Department issue more than the maximum allowed for the calendar
   year. The maximum amount of credits that may be issued in a calendar year
   shall be $100 million plus any credits previously issued under this article
   but subsequently disallowed or invalidated by the Department. Credits
   previously issued but subsequently disallowed or invalidated shall be reissued
   in a subsequent calendar year. All credits shall be issued in the order that
   each complete application is filed. For filings by mail or a recognized
   commercial delivery service, the postmark or confirmation of shipment shall
   determine the date of filing. If within 30 days after an application for
   credits has been filed the Tax Commissioner provides written notice to the
   donor that he has determined that the preparation of a second qualified
   appraisal is warranted, the application shall not be deemed complete until the
   fair market value of the donation has been finally determined by the Tax
   Commissioner. The Tax Commissioner shall make a final determination within 180
   days of notifying the donor, unless the donor has filed an appeal. The donor
   shall have the right to appeal any decision of the Department in accordance
   with the provisions of Chapter 18 (&#xA7; 58.1-1800 et seq.). If more than one
   complete application is filed at the same time, the credits with respect to
   those applications shall be issued in the order that the conveyances were
   recorded in the appropriate circuit court of the Commonwealth. In the event
   that a credit requires verification of the conservation value by the
   Department of Conservation and Recreation and such verification has not been
   received at the time the maximum $100 million allowed is reached for the
   calendar year of the donation, such credit shall not be issued for that
   calendar year but shall be issued in the calendar year that the conservation
   value of the credit is verified by the Department of Conservation and
   Recreation.
   				No credit shall be allowed for any land or interest in land conveyed
   unless (i) for a conveyance made before January 1, 2020, a complete
   application for tax credit with regard to the conveyance has been filed with
   the Department by December 31 of the third year following the calendar year of
   the conveyance or (ii) for a conveyance made on or after January 1, 2020, a
   complete application for tax credit with regard to the conveyance has been
   filed with the Department by December 31 of the second year following the
   calendar year of the conveyance. For filings by mail or a recognized
   commercial delivery service, the postmark or confirmation of shipment shall
   determine the date of filing. Solely for purposes of this condition, any
   application for which the Tax Commissioner has given written notice to the
   donor that the preparation of a second qualified appraisal is warranted shall
   be deemed timely filed, provided that the application was otherwise complete
   as of such filing deadline. For conveyances made on and after January 1, 2017,
   the deadlines provided by clauses (i) and (ii) of this subdivision shall be
   extended for any number of days exceeding 90 during which an application for
   tax credit is being reviewed for verification of conservation value by the
   Department of Conservation and Recreation, if the application was otherwise
   complete at the time of the original filing deadline.
   				b. Beginning with calendar year 2008, the $100 million amount contained in
   subdivision 4 a shall be increased by an amount equal to $100 million
   multiplied by the percentage by which the consumer price index for all-urban
   consumers published by the United States Department of Labor (CPI-U) for the
   12-month period ending August 31 of the preceding year exceeds the CPI-U for
   the 12-month period ending August 31, 2006.
   				c. Beginning with calendar year 2015, the maximum amount of credits that
   may be issued in a calendar year shall not exceed $75 million. In no case
   shall the Department issue any tax credit for a donation from any allocation
   or pool of tax credits attributable to a calendar year prior to the year in
   which the complete tax credit application for the donation was filed.
   				Beginning with the submission due on or before December 20, 2015, and in
   each year thereafter, the Governor shall include in &#8220;The Budget
   Bill&#8221; submitted pursuant to subsection A of &#xA7; 2.2-1509 or in his
   amendments to the general appropriation act in effect submitted pursuant to
   subsection E of &#xA7; 2.2-1509 a recommended appropriation from the general
   fund equal to the difference between the amount calculated pursuant to
   subdivision b and $75 million, but not more than $20 million, to be allocated
   as follows: 80 percent to the Virginia Land Conservation Fund to be used in
   accordance with &#xA7; 10.1-1020, with no less than 50 percent of such
   appropriation to be used for fee simple acquisitions with public access or
   acquisitions of easements with public access; 10 percent to the Virginia
   Battlefield Preservation Fund to be used in accordance with &#xA7;
   10.1-2202.4; and 10 percent to the Virginia Farmland and Forestland
   Preservation Fund to be used in accordance with &#xA7; 10.1-1119.3.

   5. a. Any taxpayer that has been issued a tax credit by the Department shall
   be allowed to use such credit for his or its taxable year that begins in the
   calendar year for which such credit was issued and for succeeding taxable
   years in accordance with the 10 consecutive taxable year carryforward
   provisions of this article, except for any taxpayer affected by the credit
   limitation for taxable years 2009, 2010, 2011, and 2015 and taxable years
   thereafter. Such a taxpayer shall be allowed to use such credit for his or its
   taxable year that begins in the calendar year for which such credit was issued
   and for succeeding taxable years in accordance with the 13 consecutive taxable
   year carryforward provisions of this article.
   				b. Any taxpayer to whom a credit has been transferred may use such credit
   for the taxable year in which the transfer occurred and unused amounts may be
   carried forward to succeeding taxable years, but in no event may such
   transferred credit be used more than 11 years after it was originally issued
   by the Department or in any taxable year of such taxpayer that ended prior to
   the date of transfer, except for any taxpayer affected by the credit
   limitation for taxable years 2009, 2010, 2011, and 2015 and taxable years
   thereafter. Such a taxpayer may use such credit for the taxable year in which
   the transfer occurred and unused amounts may be carried forward to succeeding
   taxable years, but in no event may such transferred credit be used more than
   14 years after it was originally issued by the Department or in any taxable
   year of such taxpayer that ended prior to the date of transfer.

   6. Neither the verification of conservation value by the Department of
   Conservation and Recreation nor the issuance of a credit by the Department of
   Taxation shall in any way be construed or interpreted as prohibiting the
   Department of Taxation or the Tax Commissioner from auditing any credit
   claimed pursuant to the provisions of this article or from assessing tax
   relating to the claiming of any credit under this article.

E. In any review or appeal before the Tax Commissioner or in any court in the
Commonwealth the burden of proof shall be on the taxpayer to show that the fair
market value and conservation value at the time of the qualified donation is
consistent with this section and that all requirements of this article have been
satisfied.

HISTORY: 1999, cc. 968, 983; 2005, c. 940; 2006, Sp. Sess. I, cc. 4, 5; 2009,
cc. 12, 510; 2010, cc. 246, 265, 321, 384; 2011, cc. 212, 296, 377, 672; 2013,
c. 798; 2015, cc. 235, 467, 680; 2017, c. 424; 2019, cc. 183, 649; 2023, c. 173;
2024, cc. 10, 146.