tax relief for tree losses

[murphy4trees]

With all these new diseases and hurricanes etc.. threatening valuable trees, I was thinking about setting up a consulting service that allows clients to deduct catastrophic property losses from their income tax....
I heard a few things about the tax laws years ago, yet never got clear on the law then, and haven't heard anything lately... Anyone ever write a report for a client or an accountant to help get a tax write off?

SAeems like we're headed for some serious loss of valuable trees and there could be an opportunity to make some money, while helping people offset their losses.

Probably should talk to some consulting arborists about this... anything going on at the knothole these days?

 

[Guy Meilleur]

Murph I sold a few after Fran and Isabel, but I was too busy with tree repair and stormproofing work to push it much. Most folks are so in shock from the damage they just looked at me strange when I tried to sell them on it.

Read IRS pub 547 on Casualty Losses to find out more. Diseases by and large do not fit the definition of Casualty, "sudden and unexpected".

Loss must exceed 10% of the owner's adjusted gross income to be used. Full amount is deductible for businesses, so they and poor retired folks are the best market.

After Andrew in 92 an IRS court disallowed an appraisal based on trunk formula, which helped shift things toward Cost of Cure, which is a less straightforward method to apply.

The cost of the appraisal itself is deductible under Schedule A, which makes it less of a gamble.

Appraisals are *hard work and open up Liability issues* if they are not well-substantiated. I do about one a week but not storm-related. There is an ISA/ASCA web course if you're interested. And yes knothole is deader than the ISA board, but I think its archives are searchable.

Amway? DN are you being hostile with your hostas too?
Bring em on!

 

[murphy4trees]

Thanks Guy... real good info

No thanks treeco!

 

[ROLLACOSTA]

i'd like too check out some EU/UK tax law on this subject

why shouldn't say a hotel or golf course etc not be able to claim some tax loss or deduction etc for the ''sudden '' loss of a valuable tree , we all know of some hotels etc that have fantastic specamins and if they where to be suddenly lost through a storm or what ever the grounds wouldn't look the same..

in the uk we have trees that are protected by the local authority,they are protected under a planning law called a tree preservation order now if i come along with my saw and by accident [almost impossible] cut a tree down that is subject to a protection order then the owner can find out the value and charge me for this tree via a formula devised by the tree council [charity] this formula is often used by councils etc when developers cut down protected trees or when utility companys severe roots etc ,so finding the amenity value isn't a prob..look forward to hearing more on this subject

 

[Guy Meilleur]

This is a press release off the ISA website:

Book Clears Up Post-Storm Debates

A publication entitled Guide for Plant Appraisal may not seem to be a grabber on the marketplace, but it certainly is having an impact on the peace of mind and the wallets of property owners caught up in seasonal storms.

The book is the ultimate reference for professional appraisers called in to determine the cost of the damage to landscape trees and shrubs wrought by winds, rain storms, ice and wet snow loads. It is the collective work of experts in arboriculture and landscaping who together have set guidelines on determining the worth of a wide range of trees in a multitude of settings.

The guide is recognized by the courts and insurance companies as a reliable arbiter in settling damage claims or assessing losses in property values. Without it, homeowners attempting to receive compensation for damage to trees could be entangled in endless debates based on nothing else but opinions.

Five green-industry associations collaborated in the making of the national guidelines. Each one endorses the publication by urging property owners to engage only those appraisers who rely on its procedures as their primary source in making their calculations. The groups are the International Society of Arboriculture, the American Association of Nurserymen, the Associated Landscape Contractors of America, the American Society of Consulting Arborists, and the Tree Care Industry Association.

According to officials of the International Society of Arboriculture, good landscaping can boost the market value of a property from 5% to as much as 20%. Trees are therefore tangible assets. Some homeowners have added comprehensive coverage riders to their home insurance policies to cover at least limited storm losses to shade and ornamental trees.

Beyond this protection, the IRS may permit an income tax deduction to those who can show they incurred a loss in excess of 10% of adjusted gross income due to a severe storm during the tax year. In all cases, claims must be supported by credible figures.

Providing those credible figures can be confounding, especially if informed and universally accepted guidelines are lacking. Evaluation must take into account tree species and size, along with tree health prior to the storm, landscape value of the tree in relation to the buildings and other components of the overall landscape, the extent of damage to the tree, and the cost of restoration both to a particular tree and to the overall landscape. The guidelines agreed to by the five associations take all of these factors into consideration.

Owners should take photographs of their landscapes every two or three years to substantiate tree number, size, condition, and appearance in case something does happen. If tree loss does occur, photographs should be taken and, if possible, the tree should be appraised before it is removed.

The International Society of Arboriculture (ISA) is a nonprofit organization supporting tree care research around the world. Headquartered in Champaign, Ill., ISA is dedicated to the care and preservation of shade and ornamental trees. For more information, contact a local ISA Certified Arborist or visit www.treesaregood.com.

 

[murphy4trees]

I think with digital technology it would be a fairly simple job to establish a tree inventory of any property with variety, size, location and basic condition listed.... So there is a record established with pics etc... then only crunch the numbers if there is damage done....

Another point worth thijk ing about...
What's the difference if an ice storm or hurricane kills your tree or some new disease or imported asian beetle does the killing... they are all just as dead and just as much of a loss... oakwilt and the emerald ash borer are sure to do (or maybe have already done) more damage than the wind, rain and ice.... Seems like the feds ought to have some compassion for all that loss.....

 

[murphy4trees]

Thanks again Guy...
Is the price of removal also tax deductible?

 

[Guy Meilleur]

Originally posted by murphy4trees

Is the price of removal also tax deductible?

Definitely, when public property is damaged (scratch on the pavement?)
Murph great idea to inventory with digicam. Buy 100 of ISA's Tree Values brochures and sell your clients on an inventory. Great way to track tree growth and build client loyalty too. I think I'll turn my teen loose on that one. Thanks for the idea!

"What's the difference if an ice storm or hurricane kills your tree or some new disease or imported asian beetle does the killing...

If it is new it is a casualty. If it has been around, not.

".... Seems like the feds ought to have some compassion for all that loss"

Feds? Compassion? Is that in their job description?

 

[Reed]

20% of appraised property tax value around here - that means a total count of trees affected by disease or catastrophy subtracted from the remaining survivors, if any.

It sure gets the city to respond out of fear of loss of tax base futures. It's still interesting that a real appraised value is high for buyers due to the magnificence of the stately trees but the place next door that's lost it's trees is on the market for the same price (?!?).

It's all in the wheeling and dealing relative to the participant's greed or lack thereof. Prenuptial agreements based on a genetic scan of either parties' potential longevity, now there's an idea for the Republic of America. They already do it in hiring and firing, why not for "love?"

 

[Guy Meilleur]

Originally posted by oakwilt
20% of appraised property tax value around here

Uncle Wiltie (remember Mr. Berle? That one belongs on your Old Smarts thread), it's the same everywhere; that's the CTLA guideline based on a little bit of research in GA a while back. But guidelines are not rigid standards.

It's amazing how one datum hits the literature and poof, people think they can stop thinking. :alien: I have gone over 20% RE value several times, with a lot of substantiation.

I like to point to a property in FL that had 50% of its RE value attributable to a single live oak.
The below is concerning a recent local case, written to a town councilman:

"Since we spoke, something else occurred to me about the resonableness test for appraisals. You'll recall that the test involves looking at total real estate value, applying a % contribution by the landscape, then applying a % contribution of the individual tree to that landscape.

What this seems to ignore is the contribution that tree canopy makes to the overall neighborhood value, which largely determines the value of the individual homes. When I asked Mr. C what his place was worth, he told me what a comparable place down the street sold for--$450k I think. I was staggered because I thought his house looked rather modest.

Neighborhoods like Circle are very desirable in large part due to the mature landscape. So when one neighbor decides to cut down all of his 100+ year old trees, that directly affects property values in the entire community. This seems to add one more reason that there is a public interest in some actions that take place on private property.

As a Libertarian I cringe a little when I say that, but it seems to be true.