LPTC Basics
Virginia Land Preservation Tax Credits (“LPTCs”) are income tax credits that offset Virginia state income tax on a dollar for dollar basis.
LPTCs are issued by the Virginia Department of Taxation as a financial incentive to reward private landowners for donating conservation easements that limit future land use rights (such as development) in order to preserve natural resources for the perpetual benefit of all Virginians.
Since 2002, Virginia has allowed the transfer of LPTCs from the easement donor to any other third party Virginia income tax payer, thereby creating the market for the purchase and sale of LPTCs.
Available to All Income Taxpayers
LPTCs may be utilized by any Virginia state income taxpayer to offset their state income tax liability. For example, individuals, couples and corporate entities can all use LPTCs to offset their state income tax. In order to utilize LPTCs, a taxpayer must either originate their own LPTCs by donating a conservation easement that qualifies for LPTC incentives or by purchasing LPTCs in the open market.
Use Limitations
LPTCs are limited to use as a credit against Virginia state income tax liability. Up through the 2023 tax year, Virginia tax regulation allows individuals to use up to $20,000 per year of LPTCs. Couples may use up to $40,000.
LPTC Carry Forward
Virginia tax regulation allows LPTCs to be utilized at any time beginning in the year that the credits are issued and ending 10 years thereafter. Thus, LPTC holders may carry forward unused portions of credits they own as long as all of the credits are used within the 10 year cutoff period.
Purchase Window
LPTCs must be purchased in the current tax year (or earlier) in order to offset current income tax liability. In other words, the credits must be purchased by December 31 of the current year. We highly recommend that prospective LPTC buyers consult their tax advisors about LPTCs early in the year and plan to purchase LPTCs well in advance of December 31.
LPTC Suitability
We encourage all taxpayers to consult with their own tax advisors and/or the Virginia Department of Taxation if they have questions regarding how suitable LPTCs may be for their tax circumstances and how to utilize LPTCs on their income tax returns.
Please contact us to inquire about purchasing Land Preservation Tax Credits.