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p r a c t i c a l w i n e r y & v i n e ya r d n O v e M B e r 2 0 1 4 107 w i n e b u s i n e s s V ineyard owners can have their cake and eat it too. With wine consumption on the rise and an increase in states allowing win- ery-direct-to-consumer shipping, it is a great time to be in the wine business. While starting or running a success- ful vineyard is the dream for many, it also comes with a hefty price tag. The good news is that a fruitful landowner (pun intended) in many states along the East Coast may also be able to reap re- wards through tax benefits or grants. A conservation or development ease- ment allows vineyard owners to retain their land but give away rights for devel- oping the land beyond agriculture. These easements are an extremely effective way to ensure that private land is protected, because the limitation is binding on fu- ture owners of the land as well. In essence, a vineyard owner gives a private organization or public agency the legally binding right to enforce the owner's promise not to develop the land in the future. While the land on which the vineyard sits may have a lowered initial value as the result of a conserva- tion easement, the easement's economic benefits can be worth considering in many states. The Northeast: Where agriculture is premium When people think of premiums on the East Coast they may think of the nearly $1,500 median cost per square foot in New York City, but it is agriculture that is at a preservation premium in New Jersey and New York. Preservation of farmlands and, thus, vineyards is valu- able, and state agencies provide various incentives for landowners to maintain the agricultural industry. In New Jersey, vineyard owners have the option to either sell or donate an easement. The sale price of a conserva- tion easement is the difference between the value a developer would pay for the land and the value of the land if only usable for agriculture. Those looking to sell an easement in New Jersey must have their property assessed by an ap- praiser authorized to conduct appraisals of farms by the State Agriculture Devel- opment Committee. Vineyard owners choosing to donate a development easement may be eligible to receive huge income or estate tax ben- efits. Such a route might be especially beneficial for vineyards with increasing sales at off-site tasting rooms around the state and higher profits developing from the ability to ship wines direct to consumers as more laws take effect, with the most recent legislation being passed in Massachusetts. Those with cold feet about selling or donating their land forever but still looking for state benefits can voluntarily restrict development of their land for eight years and be eligible for soil and water conservation grants. New Yorkers also have the opportu- nity to partake in conservation ease- ments for tax credits. Every vineyard is unique, and New York allows conserva- tion easements to be tailored to the land it benefits, so long as the lasting goal of conservation is met. New York vineyard owners may be eligible for an annual 25% refund on property taxes, up to $5,000 per year, by donating some or all of the land to a conservation agency. The land must be registered with the New York Depart- ment of Environmental Conservation to file for the Conservation Easement Tax Credit. Even better for the local econo- mies in wine regions around New York, a Conservation Easement Tax Credit does not reduce local property tax reve- nues, so it does not hinder town budget concerns. Erika Piccirillo, Cohn Lifland Pearlman Herrmann & Knopf LLP, Saddle Brook, N.J. BY Preserving East Coast vineyards while catching tax breaks Vineyard owners choosing to donate a development easement may be eligible to receive huge income or estate tax benefits. New York vineyard owners may be eligible for an annual 25% refund on property taxes.