Are Land Conservation Tax Rebates / Deductions Illegal
The scheme the
IRS is trying to stop is a “syndicated conservation easement” and it truly is “abusive”
to the system.
A conservation easement, in its original, legitimate form, is
granted when a landowner permanently protects pristine land from development. The
public enjoys the benefit of undeveloped land and the taxpayer gets a large charitable
deduction (e.g. $5 in tax credits for every $1 of land valuation). By contrast,
the syndicated form is created and packaged by promoters who buy land, finding
an appraiser willing to declare it has high development value. In reality, this
land has been inflated many times its actual value. These promotors then sell
stakes in the deal to wealthy investors who extract large tax deductions often 4-5
times what they originally put in (per ProPublica’s The
Billion-Dollar Loophole). Land conservation tax rebates can still legal and lawful when not syndicated by an inflated land conservation appraisal.
NOTE: The standard
test was to randomly select (2) appraisers, including the county appraiser for
3 values in total, and selecting the middle number. Alternatively, private
valuations should fall within ~20% of the median of these (3) appraisal values.