Natural Heritage Preservation Credit
FUNDED 1/1/10 – 6/30/26
Funding for the Natural Heritage Preservation Credit is available beginning January 1, 2010, until June 30, 2026 (extended from 6/30/2020 by AB 1219), except for the period July 1, 2020, through December 31, 2020. The extension provided by AB 1219 applies for qualified contributions made on or after January 1, 2021, and through June 30, 2026. For contributions made from July 1, 2020, through the end of 2020, no credit is available. FTB Form 3503 is used to claim this credit.
The credit is:
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55% of the appraised fair market value of pre-qualified land (fee title or conservation easement) and/or water or water rights contributed to state/local governments or non-profit organizations. Application for approval of the contribution must be made to the California Wildlife Conservation Board.
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Not refundable but available for carry forward until exhausted, but for no more than 15 years (8 years for pre-2015 contributions), if the credit exceeds net tax.
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In lieu of any other state tax credit or deduction the taxpayer may otherwise claim for the donated property.
Eligibility Criteria
To be considered by the Board to be an eligible donation, the property must meet one or more of the following criteria (Public Resources Code § 37015):
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The property will help meet the goals of a habitat, multispecies or natural community conservation plan, or any other subsequently statutorily authorized similar plan designed to benefit native species of plants, including, but not limited to, protecting forests, old growth trees, or oak woodlands, and animals and development.
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The property will provide corridors or reserves for native plants and wildlife that will help improve the recovery possibilities of listed species or will help avoid the listing of species as endangered, or protect wetlands, waterfowl habitat, or river or stream corridors, or promote the biological viability of important California species.
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The property interest is a perpetual conservation easement over agricultural land, or is a permanent contribution of agricultural land, that is threatened by development and is located in an unincorporated area that is zoned for agricultural use by the county.
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The property interest is a water right, or land with an associated water right, and the contribution of the property:
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Will help improve the recovery chances of a listed species,
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Will reduce the likelihood that any species of fish or other aquatic organism will be listed,
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Will improve the protection of listed species, or
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Will improve the viability and health of fish species of economic importance to the state.
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The donee receiving the water right, or land with an associated water right, must ensure that it will retain title to the water right, and that the water is used to fulfil the intended purposes for which it is being accepted. Assurances must be made that no harm will result to any legal user of the water if a water right includes a diversion or place of use change.
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The property will be used as a park or open space or will augment public access to or enjoyment of existing regional or local park, beach, or open-space facilities, or will preserve archaeological resources.
In addition to meeting one or more of the above criteria, the proposed donation must satisfy the requirements for a "qualified contribution" of IRC § 170. If only a portion of a proposed conveyance of property satisfies the requirements for a "qualified contribution," or if the property is sold for less than fair market value, only that portion, or the amount representing the difference between the amount paid by the donee and the fair market value, is eligible for the tax credit. The donor must not receive any other valuable consideration for the donation of property subject to the tax credit.
A donation will not qualify if it is proposed to satisfy a condition imposed upon the donor by any lease, permit, license, certificate, or other entitlement for use issued by a public agency, including mitigating significant effects on the environment of a project per an approved environmental impact report.
For additional information on qualifying donations and the mechanics of obtaining approval by the Wildlife Conservation Board, see the Board’s Website at www.wcb.ca.gov.