Conservation Easement Deductions

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andy2012
Posts: 47
Joined: Sat Aug 20, 2016 2:48 pm

Conservation Easement Deductions

Post by andy2012 » Tue Aug 21, 2018 11:26 pm

Anyone has feedback on "Conservation Easement Deductions"? How does this thing work and how much deductions can be claimed? My CPA is suggesting that if we invest some money in the conservation easement, you can deduct 4.5 times of contribution.

Any input would be helpful.

123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Conservation Easement Deductions

Post by 123 » Wed Aug 22, 2018 12:02 am

Perhaps the CPA could provide a link to the prospectus of the firm/organization offering the easement gizmos. There seems to be a federal tax benefit in some cases and some states provide tax benefits for conservation easements as well.

The IRS may be on to them - https://www.irs.gov/charities-non-profi ... -easements
The closest helping hand is at the end of your own arm.

London
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Re: Conservation Easement Deductions

Post by London » Wed Aug 22, 2018 4:47 am

I have a conservation easement on some of my property. All I would say is that you better make sure you never want to use the land again as they can't be recinded. I don't want to rescind, so that's not a problem but it's a topic I follow from time to time. I'm curious how an agreement made in perpetuity can be broken by future generations.

Cuzz35
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Location: Marietta, GA

Re: Conservation Easement Deductions

Post by Cuzz35 » Wed Aug 22, 2018 5:29 am

andy2012 wrote:
Tue Aug 21, 2018 11:26 pm
Anyone has feedback on "Conservation Easement Deductions"? How does this thing work and how much deductions can be claimed? My CPA is suggesting that if we invest some money in the conservation easement, you can deduct 4.5 times of contribution.

Any input would be helpful.
Investing in a Syndicated Conservation Easement is a very risky tax strategy. The main risks are that the IRS will audit the partnership and adjust or completely disallow the charitable deduction. These things can and do get audited. However most syndicators come out of them with only a fractional adjustment in which case the investors still come out way aheadn(60-80% returns). At least this is what I have seen in my experience.

I personally don't like the idea of them as it's sort of cheating the system, alhough that system allows for it and it's perfectly legal. The allure of 100% returns is very tempting. Some syndicators sell deals with returns well over 100%. Sometimes this is due risky appraisals but it also has to do with how the syndicators price their deals.

These are considered listed transactions which means you will have to disclose alot of information to the IRS. Make sure the syndicator provides you with form 8886 Reportable Transaction Disclose Statement and review it before attaching to your return and sending the the Office of Tax Shelter Analysis.

wanderer
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Location: Houston, Texas, USA

Re: Conservation Easement Deductions

Post by wanderer » Wed Aug 22, 2018 7:10 am


Topic Author
andy2012
Posts: 47
Joined: Sat Aug 20, 2016 2:48 pm

Re: Conservation Easement Deductions

Post by andy2012 » Wed Aug 22, 2018 9:00 am

London wrote:
Wed Aug 22, 2018 4:47 am
I have a conservation easement on some of my property. All I would say is that you better make sure you never want to use the land again as they can't be recinded. I don't want to rescind, so that's not a problem but it's a topic I follow from time to time. I'm curious how an agreement made in perpetuity can be broken by future generations.
Did you buy this property for the conservation? Whats the deduction you claimed? It appears that if you buy land then you can claim 3-4 times of the land value?

Lastrun
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Re: Conservation Easement Deductions

Post by Lastrun » Wed Aug 22, 2018 9:56 am

Cuzz35 wrote:
Wed Aug 22, 2018 5:29 am

Investing in a Syndicated Conservation Easement is a very risky tax strategy.

. . .

These are considered listed transactions which means you will have to disclose alot of information to the IRS. Make sure the syndicator provides you with form 8886 Reportable Transaction Disclose Statement and review it before attaching to your return and sending the the Office of Tax Shelter Analysis.
+1
andy2012 wrote:
Wed Aug 22, 2018 9:00 am
Did you buy this property for the conservation? Whats the deduction you claimed? It appears that if you buy land then you can claim 3-4 times of the land value?
The question you ask should raises the critical issues.

Also, make sure you, and your accountant both understand, and the syndicators explain, why IRC Sec. 170(e)(1)(A) limitation does not apply, as well as how chartiable deductions are allocated to partners under IRC Sec. 702(a)(4).

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