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Why We Did Not Invest in a Land Conservation Easement in 2022

Selenid and I did not invest in a land conservation easement in 2022. The only reason I am talking about this nonoccurrence is that we initially did plan to invest in a land conservation easement (LCE) in 2022.

The reason that we planned to make this investment was largely for tax purposes. It was even in my 2022 tax plan that I in my Inside Look at My Personal Tax Plan.

So why did we change our minds?

land conservation easement 2022

Well, there are actually a few reasons. But first let’s start with a review of LCEs…

A primer on land conservation easements

If you read my personal tax plan, you may recall that, to align with our charitable endeavors, our awesome tax advisor Alexis recommended we consider investing in a land conservation easement in 2022.

LCEs allow you to invest in land which will be conserved from being developed. They also provide you a charitable contribution that lowers your taxable income by up to 50% of your adjusted gross income.

This can work to lower your taxable liability significantly. It also represents a rare pathway to shelter active income.

What a win!

By maxing out our LCE investment, it will produce an additional $33,113 a year in tax savings depending on the passing of new tax proposals.

But there is a catch…

LCEs are listed transactions and on the IRS’s “radar” for tax abuse.

It is recommended to find investments that include LCEs but also other alternative investments within the same partnership.

By combining it with other alternative investments within the same partnership, you create potential residual income from those other investments. This helps to alleviate the argument that the partnership was only created with the charitable deduction in mind. 

It has therefore always been important to work with a vendor who follows the rules although those rules have been loosely defined by the IRS.

Why we decided not to invest in a land conservation easement in 2022

With this primer in mind, why did Selenid and I decide not to invest in a land conservation easement in 2022? Why thumb our noses at >$30,000 in tax savings?!

It ultimately came down to two main reasons…

1. The screws got tightened on LCEs

Land conservation easements were always under the scrutiny of the IRS and government in general.


Well, it’s really easy to imagine this opportunity for massive tax savings being abused and utilized against its original intention. And it was, in a big way.

Like I mention earlier, a key in these investments was to work with a really experienced deal sponsor for the LCE and ensure that tax savings were not the primary reason for the investment. Unfortunately, that is a very vague and tough to prove thing.

And then, towards the end of 2022, a new government spending bill set its sight on land conservation easement investments with even greater scrutiny.

While still possible to invest in LCEs and benefit from their well-intentioned tax benefits, the bar rose. This was enough to give Selenid and I greater pause.

Remember my philosophy on taxes…

They are a reality and, in my mind, necessary. Even as high income earners, we benefit from tax funded programs. As we struggled with money while I was in training, we utilized tax funded programs even more.

So, I do accept taxes. But I don’t like to leave a tip. So I will utilize the tax code legally to reduce my tax burden. Because the tax code is just an incentive laden rulebook that the government creates for us to live the way they want.

When LCEs fit into this philosophy, they made sense to me. Now they started to make less sense.

And that brings us to reason #2 that we decided not to invest in a land conservation easement in 2022…

2. We were already aggressively sheltering active income via real estate investing

As many of you know, Selenid and I invest in cash-flowing rental properties. These properties bring us additional cash flow every month along with some other financial benefits.

And one of those financial benefits is the ability to shelter active income via depreciation and Real Estate Professional tax Status.

For a full guide into how this works, check out Real Estate Professional Status: A Primer for Physicians.

But in short, these strategies allow us to use our passive paper losses from real estate investing to offset our active W2 income.

This is quite similar to the advantage that investing in an LCE would confer. However, investing in rental properties instead of an LCE offers additional advantages including:

  • Monthly cash flow
  • Equity build up
  • Inflation hedging
  • Forced appreciation

More on all of these factors here.

So, since Selenid qualifies for REPS with the added tax benefits, active real estate investing comes with more advantages.

It just makes sense that we would prioritize our money into that bucket. Even if LCEs had not attracted more scrutiny.

I think this is an important post to write

My goal and promise with this blog is always to be 100% transparent, authentic, and honest.

And one question that I receive very once in awhile is about LCEs and our plan to invest in them.

So, now that that plan has changed and we did not invest in an LCE in 2022, I feel it is very important to share that fact along with the reasons why!

And here are 3 other important tax-specific resources!

What do you think? Have you invested in a land conservation easement? Why or why not? How do you strategize your tax plan? Let me know in the comments below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

    2 thoughts on “Why We Did Not Invest in a Land Conservation Easement in 2022”

    1. hey man great post. Has Alexis encountered any backlash for CE’s in her clients? If so, what was the common denominator where her client’s “got caught” using a CE inappropriately?


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