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Conservation Easements

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  • Conservation Easements

    Just saw a good Webinar on CE from Buck Jeoffry.  Curious if people are using them.  I am going to move forward and see how it goes this year.  This could be a good topic for next WCI article...

  • #2
    I've participated with success, but you really cannot be sure an individual CE passed muster for severak years, so it's possible you get a tax bill down the road.  It's certainly high risk, but also high reward, and while it is aggressive with regards to tax planning, it is absolutely legal and does serve a purpose to nature and society.

    They can fail if the IRS can disqualify it on the technical process of setting it up.  If so, you are scr3wed.  The IRS can also challenge the valuation placed on the easement. If this happens, you'll likely have to repay some taxes, but not to the point that it likely inverts the value of the deal to you.

    I did one for the first time last year, and will do it again this year for 2x what I invested last year.  I was able to deduct 4.1x what I paid to be part of the easement.  One of the partners with my accounting firm was also a member of the deal I participated in, so if it goes bad, I'll have company.


    • #3
      I also vote to have a WCI article on this!


      • #4
        Also interested in this, though from the landowner-legitimately-wanting-to-conserve side.


        Investing in syndicated deals seems to be fraught...


        • #5

          Just saw a good Webinar on CE from Buck Jeoffry.  Curious if people are using them.  I am going to move forward and see how it goes this year.  This could be a good topic for next WCI article…
          Click to expand...

          The article is already written. I'd recommend waiting for it before investing. In the meantime, Ike Devji wrote one recently:

          You can tell his opinion from the title.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011


          • #6
            Aggressive doesn't equal fraudulent.

            Backdoor Roth IRA was connected an aggressive tax move until it was sanctioned.

            Keep in mind that while it is a "flagged item" on your return, the audit risk is on the LLC the conducts the transaction and issues you a K1. It doesn't mean things can't go bad, but risk is limited and upside is big. The deal I participated in and another I've been picked both had multiple, professional appraisals to get to the valuation of the deduction.


            • #7
              Make sure you have an exit plan for the property and future development vs family inheritance.   Some large properties have sat on market significant times with such easements.   We've looked at a few properties to expand my sister's property; but some that had CE on them were highly restrictive and hence the valve on resale plummeted and still sat on the market.

              There were a few ways to swap the CE with the overseeing authority, but that was a long, political, and multi-faceted procedure that we abandoned it.   Eventually one property sold for 1/2 the market value and still hasn't been developed.


              • #8
                I have participated in conservation easements the last two years and will continue to do so as long as good options are available. Excellent way to legally reduce tax burden. The easements I have participated in have been highly vetted by multiple tax attorneys prior to the offerings. Additionally, extra care was given to the valuation of the land. For example, one was a property with substantial granite reserves and multiple core samples were obtained and independently analyzed for determining valuation. Hard to pass up a 50% return on my money but due diligence is needed.


                • #9
                  Looking to partake in a conservation easement this year as well.


                  Could anyone recommend any accountants/tax attorneys that are familiar with these deductions that I can get a initial consultation?


                  • #10
                    Anyone used the following companies I’ve heard of for CE?

                    Webb creek
                    Forever forest


                    • #11
                      Last year I participated in a deal with Ardan Investors, and I sat through a steak dinner presentation from Ecovest this year.

                      I'll probably do one deal with each, as diversification seems a good idea here.