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In the early 80's, Congress passed some laws that allow people to buy undeveloped land, and declare it to be undeveloped for perpetuity (no one can develop on i

In the early 80's, Congress passed some laws that allow people to buy undeveloped land, and declare it to be undeveloped for perpetuity (no one can develop on it even if sold). The owner gets some tax benefits from doing so. It became a niche segment in the real estate. The idea is you find land that is cheap, but you have a feeling it has mineral wealth. You buy it cheap, get the survey done, and show that it was really worth a lot more. But instead of building a mine/oil well, you declare the land undeveloped for perpetuity. The tax benefit you receive is commensurate to the (now highly increased) value of the land. You make a profit this way, and the environment benefits. It's a very risky part of real estate. There are lots of environmental groups who closely monitor the land, and will file a lawsuit if they suspect you are developing on the land. Fighting lawsuits is part of the risk. Anyway, the person who did the presentation showed some interesting statistics. Supposedly, for every 10 acres of land that is developed in a given year, roughly 9 acres are declared undevelopable for perpetuity. That's really significant (if true).

mschuster91 1y ago
The problem is, what Congress can do, Congress and the Supreme Court can undo - and now you have a trove of pristine but already-surveyed land that can be exploited almost without risk. It used to be unthinkable that the US government would outright cancel such things... with the current administration, legislation and justice system, it's not just not unthinkable but expected.
- deleted 1y ago
  [deleted]
bix6 1y ago
I go back and forth on this. I love the idea of preserving land but this also seems to be a way for the wealthy to insulate their home eg buy 10 acres next to your house and declare it undeveloped. Now you get an amazing property in a pristine zone that nobody can touch all while getting a tax break you don’t need and boxing out the next generation.
- mothballed 1y ago
  It reminds me of all the desert shithole land I looked at that had covenants created by a dead boomer back in the 80s that require something ridiculous like "we will only allow a mansion to be built next to our pigfarm." In theory it's possible to reverse but in practice it requires something like standing on one foot, holding your breath, and reciting the entire bible. People desperately need housing and even in bum fuck nowhere where I live they are desperate to build a little homestead just so they can have something, and then you have this insanity with people creating covenants that basically have dead people in their graves reaching out to smite living people.
  - bix6 1y ago
    Yep this is my concern. They get the (desirable) land / homes and nobody else ever gets to live there.
  - achierius 1y ago
    Isn't this (covenants that basically have dead people in their graves reaching out to smite living people) exactly what the dead hand rule was created to prevent? This was a major part of the "defeudalization" that took place between the 17th-19th centuries in most of western Europe, as before then the nobility would entail their estates so as to keep them whole in the senior male line. It does allow for limited postmortem control, but practically not more than one human lifespan thereafter. C.f. https://en.m.wikipedia.org/wiki/Rule_against_perpetuities https://en.m.wikipedia.org/wiki/Rule_against_perpetuities
- silversmith 1y ago
  All the while foxes, deer and birds can still develop their dwellings there. Blatant disregard of the law, I say.
  - bix6 1y ago
    Yeah come on it only takes a year and a little donation to get permits! Just stand in line little fox.
burkaman 1y ago
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-the-billion-dollar-loophole 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.
- soperj 1y ago
  Wouldn't that just be straight up fraud? They just bought the land for $5.4 million, that was clearly the actual value.
  - burkaman 1y ago
    Probably, and the IRS does prosecute sometimes (https://www.irs.gov/compliance/criminal-investigation/two-tax-shelter-promoters-found-guilty-in-billion-dollar-syndicated-conservation-easement-tax-scheme 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.
  - bix6 1y ago
    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.
lawlessone 1y ago
> There are lots of environmental groups who closely monitor the land, and will file a lawsuit if they suspect you are developing on the land. Fighting lawsuits is part of the risk. Unless you intend to develop the land the risk seems pretty acceptable.
- hagbard_c 1y ago
  Only if you assume those 'environmental groups' are true to their cause and not running a shakedown operation (like e.g. the SPLC does in another politically contentious area) where they'll start accusing you of developing on your land if you don't pay them some contribution/fee/bribe.

mschuster91 1y ago

The problem is, what Congress can do, Congress and the Supreme Court can undo - and now you have a trove of pristine but already-surveyed land that can be exploited almost without risk. It used to be unthinkable that the US government would outright cancel such things... with the current administration, legislation and justice system, it's not just not unthinkable but expected.

deleted 1y ago
[deleted]

bix6 1y ago

I go back and forth on this. I love the idea of preserving land but this also seems to be a way for the wealthy to insulate their home eg buy 10 acres next to your house and declare it undeveloped. Now you get an amazing property in a pristine zone that nobody can touch all while getting a tax break you don’t need and boxing out the next generation.

mothballed 1y ago
It reminds me of all the desert shithole land I looked at that had covenants created by a dead boomer back in the 80s that require something ridiculous like "we will only allow a mansion to be built next to our pigfarm." In theory it's possible to reverse but in practice it requires something like standing on one foot, holding your breath, and reciting the entire bible. People desperately need housing and even in bum fuck nowhere where I live they are desperate to build a little homestead just so they can have something, and then you have this insanity with people creating covenants that basically have dead people in their graves reaching out to smite living people.
- bix6 1y ago
  Yep this is my concern. They get the (desirable) land / homes and nobody else ever gets to live there.
- achierius 1y ago
  Isn't this (covenants that basically have dead people in their graves reaching out to smite living people) exactly what the dead hand rule was created to prevent? This was a major part of the "defeudalization" that took place between the 17th-19th centuries in most of western Europe, as before then the nobility would entail their estates so as to keep them whole in the senior male line. It does allow for limited postmortem control, but practically not more than one human lifespan thereafter. C.f. https://en.m.wikipedia.org/wiki/Rule_against_perpetuities https://en.m.wikipedia.org/wiki/Rule_against_perpetuities
silversmith 1y ago
All the while foxes, deer and birds can still develop their dwellings there. Blatant disregard of the law, I say.
- bix6 1y ago
  Yeah come on it only takes a year and a little donation to get permits! Just stand in line little fox.

burkaman 1y ago

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-the-billion-dollar-loophole 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.

soperj 1y ago
Wouldn't that just be straight up fraud? They just bought the land for $5.4 million, that was clearly the actual value.
- burkaman 1y ago
  Probably, and the IRS does prosecute sometimes (https://www.irs.gov/compliance/criminal-investigation/two-tax-shelter-promoters-found-guilty-in-billion-dollar-syndicated-conservation-easement-tax-scheme 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.
- bix6 1y ago
  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.

lawlessone 1y ago

> There are lots of environmental groups who closely monitor the land, and will file a lawsuit if they suspect you are developing on the land. Fighting lawsuits is part of the risk. Unless you intend to develop the land the risk seems pretty acceptable.

hagbard_c 1y ago
Only if you assume those 'environmental groups' are true to their cause and not running a shakedown operation (like e.g. the SPLC does in another politically contentious area) where they'll start accusing you of developing on your land if you don't pay them some contribution/fee/bribe.