How to Qualify for Conservation Cost-Share and Tax Credits in Virginia

Five programs, three kinds of property

The programs sort by the size and use of the land more than anything else. A half acre in McLean is a VCAP property and nothing else. Five to twenty acres with some agricultural use opens up land use assessment, and possibly EQIP if you register as a farm. Larger parcels with real development potential are where conservation easements, and the tax credits that come with them, start to make sense.

The mistake I see most is people reading about easement tax credits, which are the biggest numbers, and assuming they apply to a two acre lot. They almost never do. The second most common mistake runs the other way: an owner of forty acres who has only ever heard of rain barrel rebates. Knowing which tier you are in saves a lot of wasted paperwork.

VCAP: the program that fits almost any lot

The Virginia Conservation Assistance Program is run through the local soil and water conservation districts, and it reimburses homeowners, businesses, churches and HOAs for practices that slow and clean stormwater. The eligible list includes conservation landscaping with native plants, rain gardens, dry wells, permeable pavement, rainwater harvesting cisterns, green roofs and the removal of impervious surface.

In Fairfax County the Northern Virginia Soil and Water Conservation District reimburses up to 75 percent of eligible costs. Some other districts in the state go to 80 percent. Each practice also carries its own dollar cap, and for a rain garden or a conservation landscaping area in Fairfax that cap is up to $7,000. Multiple practices can sit on one property, which is how a larger project reaches a five figure reimbursement.

The order of operations matters more than anything. The district has to visit and approve the project before a shovel goes in the ground. Work done first and submitted afterward is not eligible, and I have watched people lose a four figure reimbursement that way. After installation the district inspects, you are reimbursed, and you agree to maintain the practice for a set number of years. Funding runs in cycles and can run out, so apply early in the season.

Land use assessment: the one people forget they already qualify for

Virginia lets localities tax qualifying land at its use value rather than its market value, under section 58.1-3233 of the Code. Only localities that have adopted an ordinance offer it, but most rural and many exurban counties have. The statewide minimums are five acres for agricultural or horticultural use, twenty acres for forest use, and five acres for open space, though open space has additional conditions and a locality can set its own rules within the statute.

On land priced for development the difference in the annual bill can be large. The catch is the roll-back tax. If you later change the use or rezone to something more intensive, the county collects the deferred tax for the five most recent complete years, plus simple interest, unless the locality has adopted a sliding scale. So land use assessment rewards owners who intend to keep land in production, and it should be part of the plan from the start rather than an afterthought.

This is where design and tax overlap. An orchard, a nursery block, a hay field or a managed woodlot can each support a land use application, and each needs to be real, documented and maintained. A food forest planted as a hobby and left alone will not carry an agricultural application for long.

EQIP: federal cost-share once you are a farm

The Environmental Quality Incentives Program is run by USDA's Natural Resources Conservation Service and pays a share of the cost of conservation practices on agricultural land. That includes cover crops, fencing to keep livestock out of streams, pasture improvement, pollinator habitat, and seasonal high tunnels, which extend a growing season by months.

You need to be an agricultural producer, which in practice means registering with the local Farm Service Agency office and getting a farm number. Payment rates are set per practice and generally cover around three quarters of a typical cost. Beginning farmers, veterans, limited resource producers and socially disadvantaged producers can receive a higher rate, up to 90 percent. Applications are ranked, not first come first served, so a well prepared application tied to a clear resource concern does better.

For a small estate with a real market garden or orchard, a high tunnel through EQIP is often the single most useful thing on this list. It is also the one that most clearly requires you to be farming, not gardening.

Conservation easements and the Virginia Land Preservation Tax Credit

A conservation easement is a permanent deed restriction that gives up some or all of a property's development rights, held by a land trust or a public body such as the Virginia Outdoors Foundation. The land stays yours. You can live on it, farm it, sell it and leave it to your children. What goes away forever is the ability to subdivide or develop it beyond what the easement allows.

Virginia rewards that with the Land Preservation Tax Credit: a state income tax credit worth 40 percent of the appraised value of the donated rights. A taxpayer can use up to $20,000 of credit a year, unused credit carries forward for up to ten years, and credits can be sold to other Virginia taxpayers, which is how many landowners turn them into cash. The state caps total credits issued each year at $75 million, so timing can matter in a busy year.

The federal side is a charitable deduction for a qualified conservation contribution. Since the rules were made permanent in 2015, donors can deduct up to 50 percent of adjusted gross income a year, qualified farmers and ranchers up to 100 percent, with a fifteen year carryforward for the rest. The IRS scrutinizes these heavily. Everything depends on a qualified appraisal and a real conservation purpose.

The order I check them in

On a new property I work through them in this order. First, VCAP, because it applies at almost any size and the practices it pays for are ones the landscape usually needs anyway. Second, land use assessment, if the acreage clears the minimum and the owner intends a genuine productive use. Third, EQIP, if the owner is willing to register as a farm and run the land as one. Last, an easement, because it is permanent and should follow a clear plan for the land rather than lead it.

The design should be drawn with all of this in view. A rain garden sized and sited to district specifications costs the same to build as one that is not, and only one of them gets reimbursed. A productive block laid out to satisfy a land use application is no harder to plant than a decorative one. That is most of what I mean when I say a property should pay you back.