This segment is not as niche as it used to be and is frequently abused for enormous tax benefits now. There doesn't need to be any real economic or environmental value to the land, you can just pay someone to do a fake survey/appraisal and assign an astronomical value, and then not pay any taxes because you're now forgoing all that fake value with your conservation easement.

> One example: the former Millstone Golf Course outside of Greenville, South Carolina. Closed back in 2006, it sat vacant for a decade. Abandoned irrigation equipment sat on the driving range. Overgrowth shrouded rusting food and beverage kiosks. The land’s proximity to a trailer park depressed its value. In 2015, the owner put the property up for sale, asking $5.8 million. When there were no takers, he cut the price to $5.4 million in 2016.

> Later in 2016, however, a pair of promoters appeared. They gathered investors who purchased the same parcel at the market price and, with the help of a private appraiser, declared it to be worth $41 million, nearly eight times its purchase price. Why? Because with that new valuation and a bit of paperwork, the investors were suddenly able to claim a tax deduction of $4 for each $1 they invested.

- https://www.propublica.org/article/conservation-easements-th...

I think the law is still a good idea, but like many things it has been ruined by the rich and will need to be reformed or eliminated.

▲

BeetleB 4 days ago | parent | next [-]

Well, this may explain why the presenter said it is one of the most litigious parts of Real Estate :-)

Yes, I do know about the potential for fraud. Ultimately, this sounds more like a problem with the government not doing their due diligence as opposed to a problem with the idea itself.

And yes, this is fundamentally something only rich people can make use of. The average Joe doesn't have over $100K sitting around to buy a piece of land only to intentionally lower its value!

The example of the golf course they give is weird. You're not allowed to do it to a property that has a structure on it (at least not one with utility connections). Nor can it have paved roads. What kind of golf course was this?

Still, thanks for the article. It provides a more down to earth context.

	▲	burkaman 4 days ago \| parent [-]
		I'm not an expert, but from the article: > To be eligible for a deduction, land needs to meet at least one of four broadly defined “conservation purposes.” These include protecting “relatively natural” habitats; historic sites or buildings; land for public recreation or education; and open space (including farms, ranches and forests). My guess is that since the golf course was primarily for public recreation (or could be), and was mostly "natural" open space (grass), they argued it qualified. Probably not hard it claim it as historic as well.

▲

soperj 4 days ago | parent | prev [-]

Wouldn't that just be straight up fraud?

They just bought the land for $5.4 million, that was clearly the actual value.

▲

burkaman 4 days ago | parent | next [-]

Probably, and the IRS does prosecute sometimes (https://www.irs.gov/compliance/criminal-investigation/two-ta...), but they've already been understaffed for years and it's obviously gotten a lot worse this year.

▲

jandrese 4 days ago | parent | prev | next [-]

Yeah, but the government would have to prove it in court, which is hard and takes a long time. As long as there are a bunch of other people doing it chances are you will die of old age before law enforcement does anything about it. Lots of rich people crime works this way. Make it hard enough to prosecute and you can get away with it, especially when you can afford to hire good lawyers.

▲

JadeNB 4 days ago | parent [-]

> Yeah, but the government would have to prove it in court, which is hard and takes a long time.

Isn't this "undeveloped in perpetuity" status an application, so that you have to request an agreement to your valuation and the government has to approve it, meaning that the burden of proof goes the other way from your comment? At least, for my personal residence where I have the opposite incentive, it's not that I can go to the local government with a valuation of $3.50 for my house and they have to prove it's not; I can object to their valuation and try to prove my case, but the burden is on me, not on them.

	▲	4 days ago \| parent [-]
		[deleted]

▲

bix6 4 days ago | parent | prev [-]

O you think the IRS exists to prosecute rich people for creating money out of thin air? No they are focused on withholding from the underpaid “unskilled” workers who messed up their taxes thanks to TCJA.