One of the main points of land trusts is to provide anonymity and security to the landowners. A trust keeps your investment private and eliminates the challenges that surround public association with your land. There are benefits to a land trust that can bring investors a good rate of return. Benefits include:
Reduction of tax burdens. You will not avoid paying taxes, but you do have tax benefits. The beneficiary of your land trust can be a business or a person, and if your land is in an area where property taxes are high, being under a business name can reduce the taxes. A good example of a tax benefit includes a landowner donating development rights to a conservation trust. If you go through with this donation, you can benefit from a large tax deduction. This deduction is equal to the difference between the value of your land and what it would be worth if it were developed. In other words, your tax benefit for keeping the land from development states that an investment in conservation land trust can be worth millions of dollars in tax benefits.
You stay anonymous. The trustee’s name is listed as the contact on land in trust in public records. Being in a trustee’s name rather than your name avoids solicitation from investors and salespeople. You cannot be “found” if someone is seeking to place a lien on your land.
With a land trust, you are protected from scams and lawsuits. Your net worth will not be revealed in public records, and scammers cannot find and hound you. However, a land trust will not keep you from legitimate lawsuits. Be careful when building on your land or doing refurbishments. Use licensed contractors to perform construction work and ensure you have liability insurance.
When using land trusts to make money, do not make these four mistakes.
· Do not give up. You may not think you have the money to invest in a land trust, but as soon as you start investing, you will begin to believe in yourself.
· Beware of short cuts. If you decide to invest in a land trust, follow the rules and regulations. You will need to have patience, but your patience will pay off in the long run.
· It takes time for the money to be realized, especially when you are investing in land trusts or real estate. Make the improvements you need to do on your land and stay focused.
· Giving up too soon and selling your land trust could lead to failure. Wait a bit and see how things are working out. Some situations in the investing sector have proven that if you give up too quickly, you will lose everything.
Investing in City-Owned Property
Look for a city-owned property that can be listed as community land trust as an investment. You separate the ownership of the land from the buildings and prevent real estate speculation. Costs remain low for residents and you will get your investment back in time. Look at the East Harlem/El Barrio community land trust in New York City. The land trust preserves units of housing for residents of East Harlem and their families. This land trust reassures their residents that they can stay in their homes, have affordable rent and mortgages, and make money for investors. You make money from the rents and mortgages paid by the tenants. At the same time, land trust investments in large cities can help alleviate homelessness in big cities and give residents a leg up in the world. You are making your investment work and providing help for others.
What Is Good About Investing in Land Trust
Land trusts are private contracts, and the owners of the real estate allow the title of the property to be run by a trustee. The property owner keeps the rights to the property to rent, sell, or build, and they stay anonymous.
Put your investment in a land trust, and your name and information stay out of public records. Liens or judgments against you are not able to be collected on the property that is in the trust.