Virginia Land Preservation Tax Credits Continue to Provide Planning Opportunities for Clients
May 01, 2026
SPONSORED CONTENT
By D. Brook Middleton, CPA and Keith Chase Troxell, J.D., LL.M.
Virginia Easement Exchange, L.L.C.
www.VirginiaTaxCredit.com
For almost 25 years, Virginia taxpayers have been able to purchase Land Preservation Tax Credits at a discount in the marketplace to save on their Virginia income tax liability. However, despite the passage of time, some professionals are still unfamiliar with the program.
The Virginia transferable income tax program remains vibrant. Based on transfer fee data from the Virginia Department of Taxation, $74,739,320 of Land Preservation Credits were transferred in 2021, $66,080,680 in 2022, $73,887,540 in 2023, and $48,509,300 in 2024.
Property owners who donate a conservation easement on their property and receive Virginia Land Preservation Tax Credits, are permitted to transfer (sell) their tax credits to other Virginia taxpayers. Credits may be purchased by any Virginia taxpayer during the year to which the credits will be applied. Rulings of the Tax Commissioner, P.D. 03-12 (February 27, 2003) and P.D. 03-13 (March 4, 2003). Credits are bought and sold at a discount, enabling Virginia taxpayers the opportunity to purchase credits and apply the tax credit against their Virginia income tax liability at the face amount on their Virginia income tax return.
Currently, individuals may purchase up to $20,000 of tax credits per year, and married couples may purchase up to $40,000. Ruling of the Tax Commissioner, P.D. 05-136 (August 10, 2005). Excess credit purchased may be carried forward. Va. Code Ann. § 58.1-512(D)(5)(b).
As an example, a Virginia married couple could purchase $40,000 of tax credits before the end of 2026 for a purchase price of 89 cents per dollar of credit. The couple would then apply the credit at the face amount on their Virginia return and, in the process, save $4,400 in Virginia state income tax.
For the purchaser of the tax credits, state income taxes paid with the use of a tax credit remain deductible under section 164 of the Internal Revenue Code for federal income tax purposes, subject to applicable federal limitations. See Form 760 and Form 760C and the instructions, wherein the application of the tax credit on the return is treated as a payment by the taxpayer to the Virginia Department of Taxation for the year purchased and SALT limitation issues.
The purchase of such credits provides interesting planning opportunities for tax practitioners and their clients. In addition, the purchase of tax credits may enable a taxpayer to avoid a Virginia underpayment penalty, where the taxpayer has insufficient estimated tax payments or withholding for the year.
As the transferable tax credit program approaches its 25th year, Virginia Land Preservation Tax Credits continue to offer Virginia taxpayers the opportunity to save on their Virginia income taxes, while supporting a worthy state program of land conservation.
The Virginia Easement Exchange, L.L.C. currently has Virginia Land Preservation Tax Credits available on a first-come, first-served basis. Applications to purchase tax credits, and more information, are available at www.virginiataxcredit.com.
D. Brook Middleton and Keith C. Troxell are members of the Virginia Easement Exchange, L.L.C. and have brokered tax credits for landowners to Virginia taxpayers since 2003.