Tax Type
Land Preservation Tax Credit
Description
House Bill 5019 (Chapter 4, Special Session I of 2006) made several changes to the Land Preservation Tax Credit.
Topic
Clarification
Land Preservation Tax Credit
Date Issued
02-19-2010
TAX BULLETIN 10-2
Virginia Department of Taxation
IMPORTANT INFORMATION REGARDING
THE LAND PRESERVATION INCOME TAX CREDIT
February 19, 2010
New Cap Amount
House Bill 5019 (Chapter 4, Special Session I of 2006) made several changes to the Land Preservation Tax Credit. One of these changes established a $100 million cap on the amount of total credits that may be issued by the Department of Taxation (“TAX”) during a calendar year.
In addition, the legislation provided a mechanism by which this cap may be increased because of inflation. Under Va. Code § 58.1-512 D 4b, beginning with calendar year 2008, the $100 million cap must be increased by an amount equal to $100 million multiplied by the percentage by which the consumer price index for all-urban consumers published by the United States Department of Labor (CPI-U) for the 12-month period ending August 31 of the preceding year exceeds the CPI-U for the 12-month period ending August 31, 2006.
For Calendar Year 2009, the average CPI-U for the 12-month period ending August 31, 2008 increased by approximately 6.6 percent over the average for the 12-month period ending August 31, 2006. Therefore, for calendar year 2009, the cap was $106,647,000.
Using information obtained from United States Bureau of Labor Statistics, the average CPI-U for the 12-month period ending August 31, 2009 increased by approximately 6.8 percent over the average for the 12-month period ending August 31, 2006. As a result, the cap for the Land Preservation Income Tax Credit will be increased to $106,845,000 for calendar year 2010.
The following chart depicts the growth in the CPI-U from 2006 through the applicable year for each year that the $100,000,000 has been increased. It also shows the amount of the cap for each applicable year.
Year | CPI-U Amount Over 2006 Base Year | Cap Amount |
2007 | - | $100,000,000 |
2008 | 2.29% | $102,287,000 |
2009 | 6.6% | $106,647,000 |
2010 | 6.8% | $106,845,000 |
If you have additional questions, please visit our website at www.tax.virginia.gov, or contact the Tax Credit Unit at (804) 786-2992.
Rulings of the Tax Commissioner