Conservation Easements

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DesertInvestor
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Conservation Easements

Post by DesertInvestor » Thu Nov 01, 2018 6:30 am

Just saw a good webinar on CE from Buck Jeoffry. He interviewed a rep from Forever Forests. Curious if anyone here has done CE and what their experience has been. This would be my first one.

Thanks!

Jack FFR1846
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Re: Conservation Easements

Post by Jack FFR1846 » Thu Nov 01, 2018 6:37 am

Can you give us some details? I live in an area with lots of forest with old colonial era cart paths which are easements open to the public so long as they are used (checked by our department of conservation and recreation). We get fliers once in a while asking us to take walks and cut some of the growth, to make it clear that the paths are still being used.

But is this you giving someone an easement on your property? Do you get a tax break?
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forgeblast
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Re: Conservation Easements

Post by forgeblast » Thu Nov 01, 2018 6:57 am

Not an Easement, but we have two conservation things on our property. We have Clean and Green it allows anyone who owns over 10 acres to enroll wooded property in it and you do not pay taxes on it, but you have to keep it wooded.
We also enrolled 3 acres into CREP (Conservation Reserve Enhancement Program) its cost share and rental. Meaning they paid for half the cost of planting (trees and labor) trees in an old pasture to return it to woods and help with erosion. We also get a rental fee every year (about 200$) for 15 years and then we can do what we want to the property.

DesertInvestor
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Re: Conservation Easements

Post by DesertInvestor » Thu Nov 01, 2018 7:06 am

This is buying land to conserve it and you take a tax break between difference of value developed - undeveloped. Lots of high net worth people use it to lower taxes. Including a politician you know well...

jebmke
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Re: Conservation Easements

Post by jebmke » Thu Nov 01, 2018 7:13 am

DesertInvestor wrote:
Thu Nov 01, 2018 7:06 am
This is buying land to conserve it and you take a tax break between difference of value developed - undeveloped. Lots of high net worth people use it to lower taxes. Including a politician you know well...
One of my neighbors is a very large developer in DC; he lives here on the MD Eastern Shore. Over the past few years he has been buying land (much of it idle crop land) around us and converting it back to original wetlands and fields and restoring the riparian forest. I think he has about 2,000 acres in conservancy now. I have spoken with him a couple of times about it. The state tax benefits are significant but his overall assessment is that it is not a financial play. The tax savings and other benefits are roughly consumed by the cost of restoration and maintenance. "Do it because you want to see the results on the land, not for the money." was his advice.
When you discover that you are riding a dead horse, the best strategy is to dismount.

k73
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Re: Conservation Easements

Post by k73 » Thu Nov 01, 2018 7:16 am

DesertInvestor wrote:
Thu Nov 01, 2018 6:30 am
Just saw a good webinar on CE from Buck Jeoffry. He interviewed a rep from Forever Forests. Curious if anyone here has done CE and what their experience has been. This would be my first one.

Thanks!
Not personally, but some observations from a nearby property. A man had a conservation easement put on an empty piece of property in our neighborhood. He passed away and left it to his daughter. Without the conservation easement, this would have been a very desirable piece of land in this area. The lot was 3-4x larger than the average lots in the well established, neighborhood in a well, but not over populated area. The land was listed for sale off and on for several years before it finally sold. Restrictions from the easement include things such as holes dug for fence posts can be no deeper than 18". I don't know how much the easement discounted the final sale price, but I suspect it was substantial.

DesertInvestor
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Re: Conservation Easements

Post by DesertInvestor » Thu Nov 01, 2018 7:16 am

This is a buying a share in an LLC which does it. You then typically take 4-5x the amount you invested as a tax deduction. Depending on the deal of course. Not buying the land directly. You buy a share, like 30k a unit or so. They make sure paperwork is set up correctly ect.

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nativenewenglander
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Re: Conservation Easements

Post by nativenewenglander » Thu Nov 01, 2018 7:34 am

We owned a 53 acre piece of property which had two easements on it. The first one was along a brook which stated no cutting of trees within 100 feet of the center line of the brook. The second was on a 22 acre piece of the land, which didn't allow any residential building but you could put up an agricultural structure. One thing to remember with easements is they can only be made MORE restrictive once in place. They will be walked annually by the easement holder, which can feel as if big brother is watching you. There is a tax benefit as well, which can be taken over several years. We probably wouldn't have done the easement except we were fulfilling a promise with the person who helped us acquire the property. It's a big decision that goes on in perpetuity so consider the decision carefully. I hope I helped you and didn't confuse you.

pmj78910
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Re: Conservation Easements

Post by pmj78910 » Thu Nov 01, 2018 8:42 am

Some things seem too good to be true. Just be careful if you're planning on using this as a tax saving opportunity ...

https://www.cnbc.com/2018/01/12/this-ta ... e-irs.html

Jack FFR1846
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Re: Conservation Easements

Post by Jack FFR1846 » Thu Nov 01, 2018 8:54 am

Ok, so I'm guessing some of these examples are state specific. I participate in a Mass chapter 61 forest management plan. Under the 10 year plan, I paid a forester to develop, write up and submit the plan to the state. Mine says to take storm damaged trees and thin trees to encourage healthy ones (so if a tree has 2 out of one stump, take the less healthy one out) and use for personal use firewood. I also have to maintain borders, which doesn't mean survey....just means finding existing border markings and have some idea where they are so with a forester, I can find them again. I'm also to maintain trails which used to be my own snowmobile trails and are now just tractor trails to bring in firewood (sold the snowmobiles). 10 acres minimum and renewable every 10 years. The town gets first right of refusal if I ever decide to sell. Land is taxed on 1/10 the value (rather than 100%) and there's a schedule of payback of tax breaks if I sell. I do not have to allow public access. A state forester can ask to walk the property, but in 13 years in the program, none ever have.

There's a variation of chapter 61 for agricultural use that a friend is under. It only requires that some agricultural income comes from the property. He leases some of the land for hay growth and taps maples and makes maple syrup.

I think every state's plan will differ in requirements and benefits.
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BolderBoy
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Re: Conservation Easements

Post by BolderBoy » Thu Nov 01, 2018 9:48 am

Think this out very carefully.

My mother wanted to put a conservation easement on her property before she died so I looked into it. She wanted to prohibit the cutting of the old growth forest that covered almost all the property. My opinion expressed to her was that any sort of conservation easement would essentially make her property worthless in terms of trying to sell it after her death and especially any easement related to the timber. IMO her property was going to be VERY tough to sell anyway due to location, antiquity and insufficient upkeep. She ultimately let go of the easement idea.

Fortunately for her heirs, a real estate speculator almost instantly bought the property for what the heirs thought was an outstanding price (considering) and has been harvesting timber (with the resulting devastation to the scenery) to try to recoup his investment. The part of the property that was improved sits unsold over a year later, having had zero interest from buyers during the entire listing time (despite massive and repeated list price reductions!)

A conservation easement would surely have forced the heirs to effectively abandon the property.
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