The Virginia Land Preservation Tax Credit (LPTC) Program has proven to be a valuable incentive for landowners interested in voluntarily conserving their property through perpetual conservation easements or fee-simple donations. The transferability feature of Virginia’s tax credit program is especially valuable to landowners with little or no state income tax liability, enabling them to sell their tax credits for income. Responsibilities for oversight of the LPTC program are shared by the Virginia Department of Taxation (TAX) and the Virginia Department of Conservation and Recreation (DCR).

Virginia’s Land Preservation Tax Credit Program began in January 2000 and continues to advance the preservation of important lands across the Commonwealth. TAX’s records indicate that as of December 31, 2022, landowners have received tax credits for permanently protecting 1,030,921 acres across the Commonwealth through 4,732 land donations since program inception. The appraised value of this conserved acreage is about $4.97 billion, with landowners receiving almost $1.9 billion in tax credits.

DCR’s review of LPTC applications for one million dollars or more (and for certain other circumstances as identified in state code (§ 58.1-512) began in January 2007. As directed by § 58.1-512(D)(3)(a) of the Code of Virginia, DCR follows the Conservation Value Review Criteria as adopted by the Virginia Land Conservation Foundation to verify the conservation value of donated land or conservation easements. This verification process is an important tool for the Commonwealth to ensure that the protected lands have worthy conservation values and that the natural and historical resources are adequately protected in perpetuity.

The tax credit report contained herein summarizes the land donations for which landowners applied for 2022 Land Preservation Tax Credits within that year’s cap of $75 million. Based on the information provided to DCR from TAX for 2022, 158 applications were granted, protecting 31,365 acres, and reaching the $75 million cap.

For the calendar year 2022, taxpayers in 69 localities claimed tax credits. Loudoun County received 21 land donations - the most of any county, and received the highest value of tax credits, totaling $21,567,203. Southampton County protected the largest amount of land (2,259.42 acres).

There are eight different conservation purposes that a landowner can claim to be eligible for an LPTC. Applicants may claim more than one conservation purpose, and many do; however, it is not necessary to qualify for the LPTC program. In the 2022 LTPC program year, the Scenic Open Space category was chosen for 82.0 percent of the total acreage preserved (25,730 acres). The next three largest categories claimed were Forestal Use at 18,712 acres or 59.7 percent of the total acreage, Watershed Preservation at 17,989 acres or 57.4 percent, and Agricultural Use at 12,329 acres or 39.3 percent.

As reported by landowners in their LPTC application packages to TAX, under the 2022 cap, about 7,109 acres of active agricultural land and 10,918 acres of active forestal land were conserved. Within the LPTC application, landowners report on the total length of riparian buffers, with a required minimum width of 35 feet, in their donated easements or gifts of land. The applications for 2022 indicate a total length of 508,063 linear feet of forested buffers and 157,889 linear feet of no-plow buffers along rivers, streams, wetlands, ponds, springs, and shorelines. The two categories of buffers differ in the activities that are restricted or allowed within the conservation easement or deed of gift. Activities such as mowing or timber harvesting are restricted in forested buffers but are allowed within no-plow buffers to maintain non-woody vegetation such as pasture or grasslands.

In 2022, the Virginia Land Conservation Foundation (VLCF) distributed dedicated funding to land conservation agencies and organizations for their stewardship efforts. Pursuant to the authority granted in Virginia Code § 58.1-513(C)(2), the VLCF Board of Trustees distributed a total of $2,124,370 in stewardship funds to 40 land trusts, conservation organizations, and agencies to support their ongoing monitoring and enforcement of donated lands. The dedicated funding is generated from a two percent fee imposed on the sale of LPTCs.

DCR is also charged with conducting reviews of the Conservation Value of LPTC requests of one million dollars or more (based on a 40 percent credit for a donation valued at $2.5 million or greater) and for certain other LPTC requests as identified in state code, § 58.1-512. During the review, DCR must verify the conservation value of these donations in advance of TAX issuing a land preservation tax credit. DCR reviews these LPTC requests in accordance with criteria adopted by the VLCF for this purpose. In 2022, DCR reviewed and commented on the conservation value associated with 22 LPTC applications submitted for pre-file review by the applicants.

DCR’s oversight continued to enhance the Commonwealth’s efforts to ensure the conservation value of properties applying for the LPTC. DCR’s review process resolved several issues with applications that would have negatively affected the donation’s conservation value if the applicants had recorded their deeds as originally submitted during DCR’s pre-filing review. In addition, DCR’s review helped to ensure that persons eligible for one million dollars or more in state land preservation tax credits also addressed water quality and forest stewardship protections associated with their conserved lands. Although state law allows the Director of DCR 90 days to complete their review after receipt of a final application, on average, DCR took approximately 14 days to verify the conservation value of the final application and issue the final review letter.