Time waits for no one, so they say. And one day, our parents or grandparents will pass, leaving their property to their heirs.
You might be here right now because you’re one of those heirs. Maybe your mother passed. Maybe it was your grandfather.
Regardless of who it came from, you have a piece of land that you inherited and now you’re wondering what to do with it and how to handle it.
Are you looking to hold onto it and offer it for lease, or do you want to sell it? If so, how?
In this piece, we’ll discuss what it means to have inherited property. Next, we’ll discuss the different options you have for your inherited land. Finally, we’ll teach you a thing or two about how to save money, specifically on tax dues, when you decide to sell the inherited property.
What is Inherited Property?
Inherited property is any property that was passed on to another person following a benefactor’s death.
Under normal circumstances, that person is an heir. Typically, the benefactor who had original land owners of the inherited land was a family member or someone who put that person in his or her will.
Every country in the world treats inheriting land differently. Most countries also have a dedicated section or field of law about succession and inheritance.
In the United States, every state will treat land inheritance differently, making it an even more difficult subject to tackle here.
Thankfully, we’re not here to discuss inheritance laws or taxes on inheritance.
What to Know When Inheriting Land
One thing you have to understand is that an inheritance of land differs from actual land ownership.
What this means is that just because you inherit land does not mean it is already yours. Inheriting property is one thing, but actually merging the title of that inherited property to your name is another. You must still follow a legal process after the probate process.
Transferring ownership of the inherited property to an heir can also become more complicated if there are other family members who are also heirs. A common example of this is when you are inheriting land with siblings, which we will discuss as we move forward.
For now, take note that there are two legal rights involved in this process: your right to inherit the land and your right to gain and own that inherited land.
So, what could be the cause that would prevent you from owning land that you just inherited? Again, it’s different in every state, but outside of consulting a real estate agent or a legal counsel, it would be safe to assume that the one thing that could hold you back are taxes.
Property Taxes When Inheriting Land
Property taxes are a tax on the property by the government.
This is not a tax burden that is exclusive to inherited property. It is a tax that applies to every land or property, regardless of whether it is inherited land, farmland, or investment property.
What makes this type of tax relevant to your inherited property is that if the inherited land has any unpaid property taxes at the time of the benefactor’s death, then settling those taxes is crucial before it can transfer ownership to you.
Normally, it is the estate that will answer for those unpaid property taxes, but there can be a situation where the estate left behind by the benefactor is not enough to settle those taxes.
In these cases, they can constrain you to sell the inherited land in order to pay property taxes.
In an ideal world, the benefactor would have his or her taxes paid regularly. But this is not always the case.
What To Do With My Inherited Land
The main options for the inherited property are selling the land, building on the land, or just holding onto the land. Here are some important considerations to help you decide what to do with your land inheritance.
A good starting point is to ask yourself these questions:
Do you have family members who have an emotional attachment to the inherited land? If so, is there a family home that you may want to build?
Besides your family, does the land also have multiple people with an emotional connection to it? Does the emotional connection create enough reason to hold onto the property?
Is the land new to the family? Or has it been with the family for generations?
Could holding onto the land benefit the next generation of your family? Or could you do more with the money from a sale?
Is the inherited land farmland or land zoned for development? If so, you could investigate selling land to a developer.
Have you considered offering the farmland or inherited property for lease? How about a crop share lease with a new owner if it’s farmland?
Holding onto the inherited property will allow the asset to gain value over time. You can pass the land on to the next generation and keep it in the family. However, if no one has plans to do anything with the land, the money spent just to own the lot may no longer be worth it.
If you are inheriting a vacant lot, building a home, or turning it into a getaway with an RV or Airstream could appeal to you. But if you don’t have the time or money to put into such a project, selling the land you inherited might make the most sense…
Selling Inherited Land
If you decide to sell your inherited property, you have to choose whether to work with a real estate agent, sell For Sale By Owner, or work with a cash land buyer.
Selling by owner will require the most amount of work, as it’s up to the seller to take care of marketing, negotiating with buyers, showing the land (if requested), and handling the closing process with a title company or real estate attorney.
A real estate agent will cost the most but should save you time because the agent should have experience with land sales. There is a hefty commission to pay land agents (8% to 10%)– but, if you have a busy schedule or live out of state and want to get top dollar for your land, it may be your best option.
A cash land buyer is by far the fastest option when inheriting land you want to sell. At LandHaven Equity Properties, we can close on your land in as short as 21 days. We invest in land nationwide and make free cash offers with no obligations. If you’re interested to know what we could pay for your land, give us a call! 971-264-2408.
Comments