If you’ve experienced a recent death in the family, you may have inherited a plot of vacant land. Dealing with the legal and practical requirements of inheritances are complicated, and can be especially stressful when you’re in mourning. But after the dust has settled and you’ve come to terms with your inheritance, you’ll need to make some important decisions with what to do with the land—and you may not know where to start.
Inheriting a house usually comes with a straightforward selection of options; you could potentially move in, sell the house, or rent it to someone else. But vacant land is more perplexing. To make the right decision, you need to know what your options are, and which ones are most likely to help you achieve your financial goals.
Claiming the vacant land may require you to pay taxes in some situations. For the most part, inheritances aren’t considered taxable at the federal level. However, there are six states that currently impose a state-level inheritance tax (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania). In addition, if you end up selling the land for a profit (i.e., selling it for more than its value), you may end up owing a capital gains tax. It’s best to consult an attorney to figure out exactly what you might owe.
If the original land owner used a mortgage or loan to finance their purchase of the land, you’ll need to figure out whether the loan has been paid back in full. If the loan is still outstanding, you may be required to pay off the balance before claiming ownership of the land. In some cases, you can assume the loan (accepting financial responsibility for it), and in others, you may be able to refinance. There are several options here, but the bottom line is that if there’s still money owed on the property, it needs to be addressed.
You also need to consider the recurring costs of holding onto the land. If you have plans for the land, or are holding onto it merely because you’re indecisive, you can expect to pay ongoing fees, including:
So why would you hold the land in the first place?
There are a few possible motivations here:
Unless you’re experienced with owning and developing land, it’s likely that your best option is to sell the property. Because you’ve inherited the land, you can sell it for a reasonable discount and still make a substantial profit—and because there are so many avid land investors out there, you can probably sell the property in a matter of days, if not hours.
Selling the property isn’t just about turning a profit. It’s also about making your life easier. Managing the ongoing costs and maintenance required of vacant land are annoying, and can eat into your profits—assuming you stand to make any profits in the first place. Selling your land means saving time, and simplifying your inheritance.
If you’ve recently inherited land, and you’re interested in selling, get in touch with us at EstateInvesting.com today! We connect land owners and land investors to make sure both parties get exactly what they’re looking for. If you aren’t sure what to do and you want to make things easier on yourself, you can list your property for sale—and hopefully get an offer in a few days to a few weeks after listing.