What is the single-most effective way to affect your adjusted gross income (AGI) in the conservation easement realm? Preserve land while deducting taxes. There are people who are doing really good things with conservation easements. Is Donald Trump one of them?
In this episode, Toby Mathis of Anderson Advisors talks to Tyler Surat about tax incentives for conservation easements.
Tyler works in the renewable energy industry. His work involves solar involvement, solar installation, and solar sales in southern Colorado. Tyler talks to clients about renewable energy—the benefits and tax savings.
- Why might people put solar on a property they own or even investment properties? Aside from the benefits of being green, contributing back to the grid, and knowing that a perpetual power bill can become cost controlled by your solar investment, there are financial reasons.
- Explain the economics of it. Do most people finance solar systems? On a residential level, most people finance solar systems because most don’t have $35,000 available. Ultimately, a finance payment is in exchange for a power bill.
- Why did the U.S. government create a program for conservation easements? As a way to incentivize a private conservation effort because it cannot single-handedly serve every piece of land that should be conserved.
- What is a conservation easement? When you place boundaries on a property to where development cannot happen.
- Why would you partner in a deal to buy land that will be devalued considerably? Your investment is essentially the developed cost and the government is giving the marketable developed value as a deduction. You get 25% of your money back that you invested as income. Now, your investment turns into a deduction of your AGI.
Tyler Surat’s Phone Number: 719-580-3051
Full Episode Transcript:
Toby: Hey, guys. It’s Toby Mathis with the Anderson Podcast. Today, I have Tyler Surat. I have known you for many years working on the renewable energy side. Tyler, first off, welcome.... Read Full Transcript
Tyler: Hey, how are you, Toby?
Toby: I’m doing awesome. It’s hot here in Vegas, I’ll tell you that. I don’t know what it’s like where you are at.
Tyler: About 95 degrees. I’m hiding here in my car in the air conditioning.
Toby: You’re in Colorado. Where about?
Tyler: We’re about two hours out in Denver in the Pueblo and Colorado Springs area.
Toby: By way of introduction, I have worked with Tyler for a long time and we send clients over to him and his group because you’ll understand why in a second. He’s actually a true believer. Tyler works in the renewable energy area. What do you do for a living, just day in and day out?
Tyler: Day in and day out is a lot of solar involvement, solar installation, and solar sales especially in the Southern Colorado area. Then I do a lot of talking to your clients about renewable energy benefits, tax savings, and also what we are about to talk about here, the single most effective way to affect your AGI in the conservation easement realm.
Toby: We’ll dive into that because it’s gotten a black eye over the last few years. It’s been in the IRS dirty dozen list for what? Several years.
Tyler: Yeah, probably the last two or three years.
Toby: Because it’s ripe for abuse and you’ll understand it when we talk about this. I’m going to do a quick sidetrack, Tyler. Can you explain why people might put solar on a property they own or even investment property or things like that? Just two minutes on why they might do that.
Tyler: Plain and simple is for financial reasons. Aside from the benefits of being green and contributing back to the grid and knowing that a perpetual power deal can now be cost controlled by your solar investment, financially and tech strategy-wise, it offers a 26% tax credit that usually filters out to you individually.
Those system sizes are not cheap. The average system size that we’re doing right now is probably $30,000. Twenty-six percent of that is getting pretty close to the $9000–$10,000 range which is pretty effective for a taxpayer that is probably in a (let’s say) two-income home, like $3000–$5000. $10,000 goes a long way to those taxes.
Toby: I don’t want to interrupt you, but I just want to emphasize the point that this is tax credit, not a deduction. This is dollar for dollar that comes off your tax.
Tyler: Yes, it is a nonrefundable credit and is something that has been around for quite some time. It has dwindled down to the 26%. It’s supposed to dwindle down again to 22%, but always kicking around and kicking the tires of the financial communities of bringing it back up to 30%. I believe it will be the case in 2023, that it will go back up. We’ll see how that plays out.
On the business side of things, it is an accelerated depreciable asset. If you put it on a commercial building or in an entity that is part of the business, a rental property or something like that, you can take advantage of that depreciation so now you’re bringing your income down by the accelerated depreciation, and then you still have the tax credit come into play.
Toby: Do most people finance these? I’ll explain the economics of it really simply.
Tyler: On a residential level, most people finance these. Not all people have $35,000 laying around, but ultimately, that’s an exchange for a power bill if you’re paying a finance payment.
Toby: How much are they paying down typically?
Tyler: Zero. That’s the beauty of solar financing right now. It’s a zero-down type of investment for you. You’re swapping one bill for the other.
Toby: And you’re getting a $10,000 tax credit on something.
Tyler: $10,000 tax credit and like I said, eventually, system sizing is usually about 110%–120% of your power use, so when you contribute so much to the grid, your power company gives you credit for that. Let’s say you pay your financing off in 10 years, you no longer have a power bill. Solar financing can range anywhere from 5–25 years right now.
Toby: Fantastic. If you are a landlord, not only do you get the tax credit, but you also get to depreciate it. There’s a small modification to your basis when you depreciate. That’s one-half of the tax credit you took. If you took a 26% tax credit, reduce your basis by 13%. What we’ve seen from clients who do it comes out pretty happy.
Now, that’s not what we are talking about today. I just want to talk about […] who you were, because I’m always like, Tyler Surat, this is the ocean in which he swims, is the renewable energy area and the conservation area. When I first met you, I think you came out of a law firm where you’re doing conservations and you’re working on conservation easement.
Tyler: A CPA firm, yeah.
Toby: I remember having that conservation. I’m looking at this guy that is in renewable energy and I don’t really like most of the conservation easements I see because they feel snaky. They feel like they are not really doing something. People are investing solely for the tax implications, which I don’t begrudge people. What I begrudge are promoters who are not doing it for the right reason.
Literally setting up like hey, let’s create a tax deduction, and are usually too aggressive. I like you because this is the water in which you swim and you are a true believer. I’m not going to say tree hugger, but probably.
Tyler: I’ve hugged a few trees.
Toby: In a nutshell, can you explain—because some people haven’t heard you before—what a conservation easement is and really why somebody will be even looking at it? We will dive into the bad stuff, too, about how the IRS taxes some of them because there are some very […] promoters out there and why this is different.
Tyler: A conservation easement, plain and simple, was a way for the US government to incentivize a private conservation effort. I don’t think they can totally and single-handedly conserve every piece of land we think should be conserved. What they did is they created a program that would offer a tax deduction, a charitable donation for the place of conservation or an easement on a piece of property.
That conservation can be either through private efforts of your own land and creating enough easement to take advantage of that, or most popularly and probably the one we are talking about here today is a real estate investment that you don’t invest in. A vehicle tool that turns into a conservation easement to where your benefit is the tax deduction.
Toby: Let’s break this down. What is an easement exactly and who gets it?
Tyler: I don’t think I can spit out the technical definition of an easement, but as easement pretty much means that you’re placing boundaries to a property where development cannot happen. Typically, what you see is utility easements or government easement for sidewalks and things. You don’t own all of your property, but you might own the back half and the government owns the front half because they have every right to put a utility inside of there.
Toby: You can still own it, they just have a right across. It’s like having […] across your land to get to their land. You have a lot in front, you have a lot in back.
On the conservation easement […]—I’ll make it simple so people can understand it—I might have a beautiful pasture, and it has a ton of minerals underneath it. It could be developed and made into a bunch of houses. Those rights I could give to somebody else, a conservation company like Ducks Unlimited or there are probably a million of them. I could give the development rights.
I’m going to give it to you, and it’s going to devalue my land. I’m going to give this group the mineral rights because I know that they’ll never actually dig on my land to take away the mineral rights. There’s 501(c)(3) that’s in the conservation realm. You might say, you know what? I never want anybody to dig the granite out from underneath my field or the oil, or the gold, or whatever it is, fill in the blank.
Tyler: Or just plain out development like it’s a piece of farmland that significant developments are happening around you, you want to conserve that. You want to provide green space to the real estate that’s happening around you.
Toby: Yeah. I remember the project you did in Vail. It wasn’t you, but was it Blue Water?
Tyler: Blue Water.
Toby: Yeah, the Blue Water Group. They were developing three big parcels and they decided to conserve one of them. Here’s a beautiful land, you could just develop this whole stretch and the developer says, you know what? We’re going to take a chunk of it. We’re going to raise money so that we can conserve it.
How does that work from a tax standpoint? Why would somebody go into one of those deals where you’re essentially partnering in a deal to buy land that then you’re going to devalue considerably?
Tyler: I think you’re exactly right. You’re looking at a piece of land that has some sort of developable value, and you can quantify that developable value. A group or a creator of conservation begins the process of supporting those values and creating the conservation itself. Then you as an investor are approached, or you’re looking for this type of strategy to where now your investment is essentially the developed cost and the government is giving the marketable develop value as a deduction after development.
Really, it’s just like any other type of real estate vehicle. You’re giving money and there’s a multiple—I wouldn’t say insured—that comes with that investment. If that investment really turned into a real estate development, you’re getting 25% of your money back. You’re getting some sort of multiple 4–5 times the money that you invested back as income.
Flop that and your investment now turns into a deduction. Now, you’re getting 4–5 times of your investment as a deduction. The benefit of that is, let’s just say that’s a standard. Let’s say 4–5 times is the standard of the deduction that you get as a multiple. The benefit of that to you is cash out of pocket.
Now you’re taking a deduction for 4–5 times your money, put some money into it, let’s say $100,000, and we’re going to quantify it and we’re going to get $500,000 as a deduction. Your cash out of pocket is $100,000, but you’re deducting from your gross income $500,000.
Toby: If it’s somebody that makes $300,000 a year, you’re not going to get to take all that. You’re going to be carrying a portion.
Tyler: That strategy is most effective at the $500,000 level and above. I guess we can qualify them as rich people, but people that make a significant amount of income in any given year, it’s a significant transaction. It’s $100,000 investment for $500,000 deduction. If you make a million dollars, then you can deduct that $500,000 from your income. Now you’re only paying tax on $500,000.
Toby: What’s the limit on your adjusted gross income that you can offset?
Tyler: It’s a charitable contribution limit of 50%.
Toby: Your adjusted gross income, that means after your adjustments—the IRA contributions, probably some 401(k), things like that—you can knock that puppy in half with the conservation easement if you put enough in it?
Tyler: Exactly right. Your benefit to this is that tax on that half of income that you deducted probably was in a higher tax bracket, like a 27%, 35%, or 32% bracket. Sometimes there are state taxes, now you’re looking at 40% and above. I even have the income tax brackets in the 50% level. Somebody that’s deducting that $500,000 instead of paying (let’s just say) 30% tax on it, you only paid 20%.
Toby: Maryland, Connecticut, New York, California, those folks. For example, I’m looking at the tax sheet for (let’s say) married filing jointly for somebody who’s making between $178,000 and $340,000. They’re being taxed federally at 24%. That person, if they put a dollar into a conservation easement and they got (let’s say) a $4 deduction, I’m going to be a little more conservative than you. There are IRS agents, I don’t want them to roll. There are people like 15 times.
Toby: Let’s just say it’s a $4 deduction. That $4 deduction is going to come out of their 24%. They spent $100,000 and they put a dollar and they saved just under a dollar. In that case, you’re breaking even. I put some money in and I did something good for society, they are those people.
Then there’s California which is over $600,000. They’re in the 37%, and it’s actually technically $647,000 so let’s just say they’re in the 37% plus 13% state. They’re in the 50%. They put a dollar in and it’s four times. Then they could be looking at saving $2. They paid a dollar, they saved two, so they’re netting a dollar.
Tyler: It’s so effective at that higher income level and you’re talking about a typical investor, which is just over $500,000, where it starts to make sense. As you said, you’re investing a dollar, but you’re getting $2 worth of a benefit tax-wise.
Toby: And this isn’t a pretend donation. You can’t have a reverse. You’re giving this away internally. We’ll talk about the people that get in trouble here in a second. The people that get in trouble, you see some of the crap that they pull, but they’re doing no appraisals or crappy appraisals or they have a reversionary right. They’re not really giving stuff up, unlike the people that do it right.
Believe it or not, I always mention former President Trump did it with Mar-a-Lago and a bunch of his other golf courses. He’d give away the development rights so nobody’s going to take that course and build a bunch of houses on it. It’s good for security for those people around, it makes it more attractive for those people that are investing around it because you know there’s going to be a golf course there.
I live two miles away from Badlands Golf Course where they did the opposite. Now they’re developing and they took it. It was in downtown Summerlin. Snoop Dogg lived right next door and all these famous people, and boom, it’s just dead grass now. They’re going to build houses in these people’s backyards.
There is a value to society, not just to golf, but I’m just saying there’s open space. There are these big open green spaces. Now you look like you came off the golf course. Anyway, I want to bring this and throw this into your lap, but there are people that are doing really good things with conservation easements.I don’t think that the government’s ticked off about it. Who is the government pissed off about? Then how do you deal with it?
Tyler: I would say when you look at a conservation, if this becomes a strategy for you, you have to look at the property as if it’s Central Park to New York. Does this conservation have developable value? Lately, I’ve been talking a lot about a matching principle. Is that developable value soon?
There’s conservation and then there’s conservation in an area that has high development and could very much well turn into a real estate development and provide the returns that you have. Most importantly, you know what Central Parks were on the property because it’s surrounded by comparable properties. These are the people that the IRS is not ticked off at. It’s the people that are conserving in these types of areas like Central Park is to New York.
Toby: Doesn’t it come down to your appraiser? Because if you’re using a reputable appraiser, somebody who’s licensed to actually…
Tyler: I think it really does come down to the matching principle, and like you said, the appraisal. They found abusers and they found a lot of bad actors, and what they found is that a matching principle didn’t really exist. They’re conserving property that maybe if a highway was built in 2025, then we would have an ecosystem that then surrounded this property that would make it yes, it might have mineral rights, yes, it might have some sort of value, but it’s not as high as what you’re saying that value is. Like it’s not $1000 an acre. It’s $100 an acre.
Toby: I think 2007 or 2006 right before the real estate crash where they’re walking in saying, this house is worth $600,000. You have an appraiser say it’s worth $600,000, there are no comps anywhere. They’re plucking a number out of their katush and it’s not even out of their katush. It’s because the bank said $600,000.
People are still doing that in the conservation easement realm, too. They go to their appraiser and say we need this valuation. Those are the bad ones and thank God they’re getting blown out because the principle is sound. We need to conserve areas. We don’t want to develop everything unless you like concrete jungles.
Tyler: The government’s not going to step in and say, oh, well, let’s place an easement on this land and take it from somebody. Unless they previously owned the land, they don’t have the funds to go buy $2 million or $3 million worth of property that should be developed at any given time.
Toby: Because that’s their option. The government has conserved it themselves, the Bureau of Land Management holding on and dripping it out. If they take it from you, then it’s a government taking and you have a right to be compensated. They just don’t have the means to go out there so they’re incentivizing private citizens like us to say, hey, you know what? I’ll give you a little tax break if you do that willingly and give it to a qualified 501(c)(3).
Have you seen anybody doing shenanigans where they don’t really give it to a 501(c)(3) and they’re playing a game?
Tyler: Or like a land trust or something like that? I just recently read an article in the Wall Street Journal that talks about a bad investor and bad conservation investments, and it’s really just about making the producer’s wallets fat. I haven’t seen anybody not give it away properly but they have misvalued it significantly, and they don’t mind spending the money fighting the IRS and trying to justify their deductions.
Those are the bad actors. I have seen every bit of what the IRS has quantified over the years as bad conservation, why they put out like it on the dirty dozen list, and why there’s so much negative press. We’re not talking about a $4 deduction at an individual level. We’re talking about a piece of property that produces $50 million worth of deductions through $10 million or $15 million worth of investments.
That’s why this is so significant to the IRS is because they’re exempting $50 million worth of income but—not to the IRS’s detriment or anybody else—that’s what they offer and done right through proper means, matching, and making sure that there are comparables around that support the values. That’s a valid deduction. It’s not a loophole. It’s a valid deduction. It’s a valid IRS-created deduction. Unfortunately, there’s just been a lot of abuse.
Toby: Yeah, change the law if you’re not happy with it, but don’t punish people that are using it. There’s a legitimate use, and there are people that are misusing it, and it’s good that they’re going out and calling them out.
If you’re somebody who’s investing in one of these, because I’m sure they have a heart attack if they read the New York Times article like all conservation easements are evil or something. What do you do with those folks? What do you tell them?
Tyler: Usually when I meet somebody, I ask them what they know about conservation easements. Have they done any of the negative side of research? Unfortunately, it’s a product. We use this phrase quite a lot and I probably used it on a previous podcast. Maybe next time I wear a shirt, ‘you bet on the jockey, not the horse.’
You’re betting on the producer to create that vehicle of investment for you. It’s not something that you go out and do yourself very rarely. It might be agricultural techniques and stuff like that, but very rarely do you go out and do this to yourself.
I always ask people, what do you know? I’ll talk to them pretty plainly of why it exists. Most people get the fact that there are bad actors and everything, and everybody wants to take advantage of the loophole. When you explain that you have to look at this. Number one, you have to look at this as a real estate investment. It has to have some financial benefit income-wise before it could ever be valid conservation.
First and foremost I say, you as an investor need to look at this. Would you invest in this if it was income-based? Do you believe in this as it’s income-based? Because all things aside, we all love the green property and we all love the benefits of having the green property around us, and we love the green efforts like you said. I don’t think I’m a true tree hugger, but I do believe in the fact that development does override in a lot of areas.
Toby: I just call you that, Tyler. You’re one of the few people that I know […].
Tyler: Energy […] to a financial point. People invest in these knowing that they’re getting a tax deduction but also having the satisfaction of conserving a piece of property. We all live in those areas, like you said, where now they’re building houses on a golf course. Everybody’s looking for a piece of land to either go up or spread out.
If that gets taken up, then communities wonder why they don’t have trails to the river or why only the rich people get access to the river through the properties. They can’t access the beauties of America because nobody’s placed a green space or an incentive of green space around that.
Toby: That’s it, especially in things like Austin, Seattle, Portland, Las Vegas, Miami, Tampa Bay, and New York. You start looking at these cities that just populations are crazy. They’ve just had just massive growth. If you don’t incentivize this now, it’s going to be too late later.
The government can come up and just take your house and say, hey, you know what? I’m going to put a walking trail on your property. I’m just going to take it away. They don’t do stuff like that. That’s why you’re doing a developer’s doing it who’s saying, hey, I’m developing this community and that community. In this particular spot, we are going to conserve.
Tyler: Usually it has some sort of conservation benefit, like watershed access or I’d say very rarely you get into the animals like the spotted owl or something like that. You don’t see a whole lot of that. It really is a property if it’s not conserved and we’ve eaten up every bit of green space.
You mentioned all those big cities. What’s funny about that is now that COVID happened and a whole lot of people don’t have to work from an office anymore, they’re spreading out. Development in (let’s say) our community 2 hours south of Denver, we’re 2500 homes behind expectations for people that don’t want to live in the city anymore or go up the Vail Breckenridge kind of corridor.
People want an outdoor life now. They’ve gotten a taste of freedom and they’re figuring out how to do stuff from home and work-life balance is really coming into play, but it’s really coming into play with where your permanent home is.
Now there are all these places that have never been touched before, that are being touched with new houses, new development, new everything, and they’re being overdeveloped. These are some of the places where developers are looking now and say, this is where our niche is. This is where we can conserve the most and do the most for a place like Vail and you better do it now because if you don’t do it now, it’s going to have 160 houses on it and they’re going to be $300,000–$400,000 homes or $500,000 homes and now we have space issues and zero access to the river.
Toby: Yeah, and that’s it. People who abuse the conservation easements are the ones that have zero regard for anything we just mentioned. They’re just trying to find a piece of property that they could somehow justify some ridiculous valuation and they’re not really doing anything for society. Those people can burn, as far as I’m concerned. What are you doing now? Do you have any open conservation?
Tyler: Some of the groups that I know of have conservations in the western United States area to where it’s starting to become a thing for people to want to branch out. Everybody wants to live in Montana and have three baby cows. I think that’s how TikTok goes or something.
Toby: Tyler, I’m okay with Vegas, even though it’s 150 degrees today.
Tyler: Everybody wants some sort of land and things like that. I do know of a few developers right now or producers of conservations with open deals and they’re coming sooner and sooner because it’s been, I don’t want to say a popular strategy, but it’s an effective strategy, and investors who do it and understand it, you always make a million dollars.
It’s very effective for people in the W-2 realm, your lawyers, your doctors, your high-income earners, and your salespeople that can’t do anything with their income so they just end up paying tax because they don’t have any other strategy. You’re talking about a charitable deduction that reduces your W-2, still allows you to report a million dollars worth of income and look rich to the bank or wherever you need to report your taxes, but now you got a $500,000 deduction on the back end.
Those investors habitually come back and producers have found pieces of land and they’re offering them earlier and earlier. It used to be a late fourth quarter decision and it’s just not a late fourth quarter decision anymore. Some of these deals will close up before the end of the third quarter.
Toby: We got to do it now. I think one of the things with this big run-up and people can predict the bubbles are going to burst and all this stuff; it’s not. Like you just said you’re 2500 properties behind. As a country, we’re about three million properties behind and they’re stopping building because interest rates are too high. We are way under the bill.
Supply and demand pretty much dictate your prices. Your affordability gets dictated a little bit by the cost of the interest rates but heck no, bubbles burst. You’re kidding me. It’s a 777 might be cruising. We might be at 30,000 ft for a long time. It may not be going up as fast, but it’s not diving back down towards the earth.
Tyler: A lot of the bubble bursting in the past had to do with, like you said, appraisers that spit over this house is $600,000 and somebody that makes $50,000 now qualifies for that because we’ve overbuilt or we’re trying to do all that. None of that really exists anymore.
Toby: This time, shenanigans were the Fed dumping an extra $7 trillion into the economy. That’s your shenanigans right there.
Tyler: I was going to mention, too, when you asked me about producers and looking at producers. Good producers, they’ll provide you with an ample set of real estate documents. They will provide you a deck of documents explaining comparables, explaining the areas. You might be in California investing in a property in Colorado and you know nothing about that market. They’re going to give you market research. They’re not going to develop 100% of the properties of the property. They’re going to offer you an exit strategy, too.
They’re going to conserve 90% of it and leave 10% open for a developer to come in and maybe now, instead of building 100 houses, they’re building 10 houses that now have green space behind them. But you’re exited now from that land partnership because the developer has now come in and purchased that added value to your investment.
There’s some sort of minuscule return to you as an investor, but your benefit came, like you said, from not paying 37% taxes. You pay 20% on the funds that you earn.
Toby: You’re not getting value back. I put $100,000 and I’m not seeing that $100,000 back. Maybe you’re going to see $12,000 of it. Your benefit is in the tax deduction and the government is giving you an incentive.
Tyler: Your benefit is you paid $100,000 out of your pocket instead of $370,000 out of your pocket.
Toby: Well, that’d be extreme, but I know what you’re saying. It’s popping that high. I could see it. If you were up in California and you’re over $600,000, you’re in the million-dollar range, then those folks, that’s probably going to be the economics of it. Absolutely. Doctors in California.
Tyler: Those are pretty real numbers that I just said to you because your investment went so far. It went to $500,000 worth of a deduction that you’ve already reached those upper echelon tax brackets. Now that $500,000 was taxed or should have been taxed at that level.
Toby: Let’s move off of that. Now we know what a conservation easement is. Hopefully, it’s taking the fear out of it. The next question and I know that you are not a conservation easement like you don’t create them, but you’ve helped my clients over the years and I can’t remember how long ago we’ve been talking a lot of years. I don’t even remember when. Every time I think […].
Tyler: I think we are about 5 and in between 10.
Toby: I met you through a client who said this guy is the real deal because I just wouldn’t refer to anybody. I still only refer to you. We keep it really simple here at Anderson. It’s like we don’t know yet, chances are if you’re a conservation easement company, it would take me a long time before I’d ever be. I probably would never deal with you.
I would just say, hey, Tyler, here. I would say you deal with these people because you understand it. You’ve grown up in it. You worked with a firm that actually did the conservation easements. You actually do this field. Can you still help people find projects?
Tyler: Yes. I can certainly help them find them and understand where a good producer is. I’ve also looked at some of the deals that habitual people have been investing in over the years. They’re like hey, these people hit me up again. Would you mind reviewing the deal? Even though I don’t know too much about the producer or maybe I’ve heard their name or something like that. I’ve done that before too, and tried to direct them or just get them.
You’re going to get a nice little benefit there, but here’s what I see. It’s not a property that’s going to be developed in the next 5–10 years. It’s not something that really can hold the values that they’re stating. You might want to rethink it.
Each investor makes their own decision. I’m just here for knowledge. Usually, it’s about an hour-long conversation and just understanding how conservation works, and then I always give people my personal cell phone and have continued conversations or like you said, if they have concerns and they know what’s a good strategy for them.
I had a guy last year, I think he made over $26 million, and he couldn’t wrap his head around it. He couldn’t wrap his head around the investment that he had to make to save taxes on $13 million and couldn’t wrap his head around it, so he didn’t do it.
That’s where you’re at. Unless you can wrap your head around it, unless you have good people around you, like your people who have been really good on advising a client of, hey, why don’t you try this? Your W-2 is just so high or something like that. It’s not something that you just flirt with.
It’s something that’s a real business strategic decision because it does have a lot of financial benefits. But it comes with some risk, too. If not done right, you could open up a door to significant risk. Five or 10 years down the road, you could still be dealing with 2022 taxes, which is not the ideal.
Toby: Perfect. How do they get a hold of you?
Tyler: Usually I have an email address, it’s firstname.lastname@example.org. The tree has nothing to do with tree hugging. I know we’re hitting this.
Toby: You’re such a tree hugger. At this point, that’s why I’m going to say Tyler hugs trees. We’ll make sure that we get it out there so people can reach out to you.
Tyler: I love talking about it. I love giving people advice about it. As you said, I’m a believer in strategy. There’s not a whole lot of positive energy going out towards conservation easements. Even some CPAs—no offense CPA firms or tax providers—are very wary of the strategy and keep in mind they’re worried for certain reasons and they see it a little bit differently.
But I’ve seen the benefits. I’ve seen the benefits of my investors. I’ve seen the benefits in some of your clients. I think once you can wrap your head around it and see what it can do for you and put money in your pocket, it’s a very viable strategy at the income levels that we previously stated.
Toby: Perfect. I really appreciate you coming on and sharing with us. I couldn’t ask for a better interview on conservation easements. I think you were very measured and that you did a really great job. I appreciate you doing it.
Tyler: I appreciate that. I love coming on and talking about it and just training people. I appreciate you having me and also promoting the strategy because there are not a whole lot of people that look at that risk and say, well, done right, this could be a very viable strategy for you. Kudos to you and your company for looking at it that way.
Toby: It’s in the law for a reason, guys. Congress made it and there’s an incentive there. If you do it right, it’s legit. If you do it and you’re working with these people that there’s no basis in reality and there’s not a benefit that’s being conferred to a nonprofit, then I’d run. I wouldn’t do it.
I actually believe in you guys, and you in particular, because you’ve always been fair to our folks. You can tell people that are actually interested in doing things for society and then there are people that aren’t, that are just there for dollars and cents.
You say you’re not a tree hugger, but in my book, you are firmly in the world of solar, conservation, and doing some things that will help make the world more sustainable. Anything that we can do, there are tax incentives built into a lot of things. Everything from we started with solar and ended with conservation easements. There are tax incentives for these things because there’s a benefit to society. I just appreciate you doing that.
Tyler: I appreciate it. Thanks, Toby. Always great talking to you.
Toby: You got it.