The conservative Easement is also known as conservative Restriction. It is a power invested in a land conversation or land trust to restrict any form of exercise on a land area in order to achieve conservation purposes. For a conservative easement, the property owner gives up the right to make certain changes to a property, for the sake of conservation for future purposes.
It limits the range of use of a land area and lowers how a specific property can be used. As a property owner, if a conservative easement meets the criteria of the Internal Revenue Code, you may qualify for a tax reduction based on the value of the property. Conservative easement is basically used for land preservation.
A property owner agrees to protect his land from development with a conservative easement. Upon signing a conservative easement, the landowner forgoes the ability to cash in on the market value of the land. The landowner is however entitled to remove from their tax bill the difference between the estimated market value and the reduced financial value of the land, according to the condition of the easement.
Property owners in Atlanta, ga, and Decatur use conservative easements as a major financial decision on tax incentives. When you sign a conservative easement, part of the property value is given up in exchange for tax incentives. The tax incentives from a conservative easement are used to offset some loss in property value, making a conservation easement a valid option for more landowners in Atlanta, ga and Decatur.
Importantly, landowners should be aware that the improper use of tax deduction for conservation easements is an abusive tax shelter. Proper IRS conservative easements guidance is important to avoid questionable transactions.
Benefits of Conservative Easements
Conservative easements are viable options for landowners in Atlanta, ga, and Decatur. It has tax reduction benefits that can make you consider conservative easements on your property.
Flexibility: There is high flexibility that comes with conservative easements. A conservative easement is unique to every property owner; written specifically to fit your needs. You can donate your land but retain the right to grow crops on a part of the land. The land trust is responsible for keeping the statues of the conservative easement. Conservative easement may apply to the entire property or a portion or allow for public access or not.
Estate tax benefits: conservative easements restrict the land from potential development which means the market value is lowered. A lowered market value for your property significantly reduces your estate tax when the property is passed on to the next generation. This makes it easy to keep the land intact.
State and Federal tax benefits: if you hold a conservative easement on your property and it meets certain conditions under the IRS law, it can qualify for a tax deduction on your state and federal income taxes. For state and federal tax benefits, the easement is considered a donation of development rights to your land area. The value of the donation is the difference between the market value of the property (if its development was not restricted) and the property value with the restriction.
Property tax benefits: since conservative easements lower your land’s value, it, in turn, reduces your property taxes.
Control and permanency: conservative easements can be transferred, which means it remains active even when the land changes hands. Having a skilled tax attorney to handle your easement terms can ensure that you have peace of mind on your property and you can be sure that your property will be protected after you are long gone.
IRS Enforcement Action On Conservative Easements
A property is considered for IRS conservative easement if it is given out as a deductible charitable donation. A conservative easement that qualifies for IRS reduction is considered a non-cash charitable donation. Charitable deductions attract special rules for conservation easements. The deduction amount is based on how the property to be conserved is being used.
Several cases of abuse on the conservative easement
has been noticed by the IRS. These abuses compromise the policy that the IRS and the Congress intend to promote by the easement statutes. Taxpayers are commonly armed with questionable appraisals and faulty promoters to take inappropriate deductions for easements. Some taxpayers go as far as claiming deductions when they are not entitled to any.
When taxpayers fail to comply with conservative easement laws and regulations, they do not qualify for deductions. Some abuse comes as a form of taxpayers using developed or used properties, which is inconsistent with the law; section 501(c)(3). Other cases involve the charity allowing property owners to modify the conservative easement or develop the land in a way that is inconsistent with the easement’s regulation.
A historic easement is another cause of problems to the easement regulation, especially façade easements. Many taxpayers abuse the IRS terms by taking out inappropriately large deductions. They agree not to develop or modify the façade of their historic house and they get an easement to this agreement. Modifying the façade of such property makes the agreed deduction too high for the property, but taxpayers ahead to abuse the law by modifying their property. If the facade was already subject to restriction under local ordinances, the taxpayers may give up very little or nothing.
The Notice 2017-10 identifies certain syndicate under IRS enforcement. Investors are offered charitable deductions worth at least 2½ of their investments. The IRS conservative easements also included the 2019 “Dirty Dozen ” on the list of IRS tax scams to avoid. The IRS enforcement action on conservative easement is increasing and the body claims to take action on conservative easement audit and requirements for claiming a deduction.
The IRS announcement on abusive easements reads a nonstop pursuit action on everyone involved in promotion, creation, marketing, and acquisition of inappropriate deductions. Every enforcement option, including civil penalties and criminal investigations, will be employed to ensure that a criminal prosecution is made.
How To Remedy Taxpayer in Easement Syndication
There are penalties to be suffered by taxpayers involved in easement syndication. But, these penalties can be avoided if an amended return is quickly filed or an adjustment is made to request a reversal of improper charitable deductions. Taxpayers in Atlanta, ga, and Decatur can avoid conservative penalties if they completely remove the irregular contribution and related tax rewards from their returns by prompt filing a revised return or administrative adjustment request.
This remedy is a limited one for taxpayers who do not currently have a lawsuit. The IRS employs taxpayers to immediately consult a competent, independent, and skilled tax attorney to consider the best possible option for you. When you have a conservative easement, you must have a competent IRS attorney. This will ensure that you have adequate information to protect your reduction. It also helps you to be conversant with the regulation of the easement to prevent you from facing any penalty.
When improper deduction contribution happens, the remedy can only come from consulting a competent IRS attorney in Atlanta. Cumberland Law Group strives to give solutions to your IRS problems. At Cumberland Law Group, we deal with the IRS on your behalf to ensure that your dealings with the IRS are appropriate and to avoid any problem whatsoever. Contact us at Cumberland Law Group for personal assistance on your IRS issues.
