Anyone have experience with land conservation easements or farms?

Question

As someone with a full-time job and W2 income in a very high tax state I have been looking at ways to maximize my tax deductions. As part of this strategy it was suggested I look into land conservation easements. However, I have had trouble finding companies that seem to specialize in offering out of state investors these type of properties (hard to find good properties for this in NYC for sure) especially with some type of property management. Another alternative would be a syndicator in this area but again I have not really been able to find much here or elsewhere.

Has anyone here utilized easements? If so, what was your experience? Has anyone done it from out of state where they actually own large plots of land or farm land as both an investment and for easements? Any experiences or referrals would be appreciated.

Kudos to @Brandon Hall for the suggestion to look into easements, always has good suggestions for us RE investors.

Charles Worth · Answer

@Ashish Acharya

Besides for the tax deduction, why is it not a normal investment? Do you not get the rights to the land? I assume the partnership still holds the land? Easement land is not worth as much but I doubt it would be worthless.

I did read about the audit risk that is certainly a consideration.

I am also surprised there are not more people who let you actually have the whole land itself where you could actually own it and take the deduction but retain the land for your own use.

Ashish Acharya · Answer

@Charles Worth ,

CE is one-time deduction that you get. Usually, there are companies that pull money together from investor like you in a partnership and you would get the K-1s from the partnership with huge charitable deduction.

I dont know if you know this but CE is not a traditional investment.

So you need to understand that you are not buying a property that is giving you a tax deduction from its operation. The partnership you invested will donate the "inflated easement right" on the land it bought and get the fair market value deduction of that easement as a charitable deduction. People invest in them ( partnership) each year to get a charitable deduction. IRS has ramped up audit on these transactions. These transactions are already scrutinized by IRS as they were moved to " Listed transaction" since 2016.

We have dealt the 100s of them last few years. You basically would buy an interest in the partnership for 50k, and you would get the deduction for 200k as charitable distribution in the K-1s that flows through you.

Not saying you should not invest, but make sure you understand the risk of this kind of transactions.

Tony Wagner · Answer

@Russell R.

I just caught this post. If your interested in farm land. Buy it and rent it back out. Good return in some areas. With depreciation

Russell R. · Answer

@Charles Worth curious to know how it went if you pursued this route ... I’m curious to explore this myself.

Bonnie Wright · Answer

I would like to invest in a syndicated conservation easement. Do you know of any that are open to investors?

Charles Worth · Answer

@Ashish Acharya

Well both would be preferable (the deduction and the investment). I can think of a number of ways to syndicate the deduction and either buy land that was not even a decent investment or give the actual benefits of the land to the syndicator.

Ashish Acharya · Answer

You are right. But, If not tax deduction, why would you invest in the land, unless your strategic move is to invest in the land? I thought you were looking for tax deductions.

CE is mainly used to save taxes by wealthy individuals.

Anyone have experience with land conservation easements or farms?

Anyone have experience with land conservation easements or farms?

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