Easements — What Property Owners Need to Know
What This Video Covers
Conservation easements have been one of the most aggressively promoted — and aggressively audited — areas in tax law over the past decade. In the right circumstances, donating an easement produces a legitimate and substantial charitable deduction. In the wrong circumstances, it produces an IRS examination, penalties and potential litigation.
This video explains how conservation easements work from a tax standpoint, why the IRS has made them an enforcement priority, and what property owners should understand before entering into an easement arrangement or defending one they have already claimed.
Key topics addressed include:
- How conservation easements qualify for a charitable deduction under IRC § 170(h)
- The “before and after” valuation framework and why the appraisal is the central issue
- What the IRS is targeting — syndicated transactions versus legitimate easements
- Deed requirements, conservation purpose standards, and qualified organization rules
- Penalties for valuation misstatements: 20% for substantial, 40% for gross
- The 2022 legislative cap on syndicated easement deductions
- How to defend an easement deduction under IRS examination
- Why representation by independent tax counsel — not the promoter — is essential
Why This Matters
A conservation easement is a voluntary legal agreement in which a property owner permanently restricts certain uses of their land — typically development rights — and donates those restrictions to a qualified organization, usually a land trust. The property owner retains ownership of the land but gives up the right to develop it in ways that would diminish its conservation value.
About the Presenter
Benjamin A. Goldburd, Esq.
Goldburd McCone LLP
Benjamin brings focused experience in IRS collection defense, including lien and levy disputes, CDP hearings and negotiated resolutions. Our team’s combined backgrounds in accounting, business and wealth management ensure that enforcement responses account for the full scope of a client’s financial position.
Frequently Asked Questions About Estate and Gift Tax
Are conservation easement deductions still allowed?
Yes. Conservation easements that meet the requirements of IRC § 170(h) remain a valid charitable deduction. What has changed is the level of IRS scrutiny — particularly for syndicated transactions where investors claim deductions that significantly exceed their cash investment. A properly structured easement on property you own, with a defensible appraisal and a compliant deed, is still a legitimate tax planning tool.
What is a syndicated conservation easement?
In a syndicated transaction, a promoter organizes a partnership, the partnership acquires property, and the partnership donates an easement. The investors receive deductions allocated through the partnership — often at a ratio of 3:1, 4:1 or higher relative to their investment.
What penalties apply if the IRS disallows my easement deduction?
A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust that allows you to transfer the appreciation of assets to heirs at a reduced gift tax cost. You contribute assets to the trust and receive an annuity payment back for a set period. If the assets grow faster than the IRS-assumed interest rate, the excess passes to beneficiaries gift-tax free. In a low-interest-rate environment, GRATs can be particularly effective.
I invested in a syndicated easement years ago. Should I be worried?
It depends on the specific transaction, but the concern should not be dismissed. The IRS has active audit campaigns targeting these deals, and in many cases the statute of limitations has been extended by the promoter’s failure to properly register the transaction or by other filing deficiencies. If you have not already consulted with independent tax counsel — someone not affiliated with the promoter — doing so now is the prudent step. The earlier you assess your exposure, the more options you have.