If youโre not planning on using the land youโve inherited you might consider selling it after considering the costs to hold it. Taxes and maintenance add up quickly!
If you have recently inherited some land, then youโll know that deciding whether to keep it or sell it can be a difficult decision to make. Let us help you make that choice by taking you through some of the key issues you need to consider.
Firstly, there are many reasons why you might want to keep hold of land that has been passed on to you. If it is somewhere that has been in the family for a long time or holds happy memories, then itโs very natural to want to preserve your connection with the land and the past that it represents. It might also make sense from an economic point of view. The land may prove to be a worthwhile investment that will increase in value for you to benefit from later, or even pass on to other family members in due course.
However, holding onto land is not a cost-free option. There may be an outstanding mortgage on the land and unfortunately, you will inherit this, along with the land. If the land is not generating income to cover the debt, then you must ask yourself if this is a cost you can comfortably meet.
Then you have to consider the cost of maintaining the land. A rural plot may have trees, scrub, and grass that needs keeping in check, whilst an urban piece of land will need to be kept rubbish free. You should also take out vacant land insurance to protect yourself against potential lawsuits for injuries sustained on your land.
As in every part of life, thereโs the issue of tax. Estate and inheritance taxes are complex subject that needs a tax attorneyโs advice. But be aware that, even if you avoid these so-called โdeath taxesโ, if you sell the land at a later date, you may become liable for capital gains tax.
There will also be ongoing property taxes. Depending on the location and zoning of the land, this could give you an annual bill of hundreds or even thousands of dollars. In some states the transfer of land to a new owner brings about a reassessment of the land value, resulting in a higher tax liability. Whatโs more, you canโt offset tax against any depreciation of structures or use the homestead exemption on your tax return.
You may well decide that you can cover all the costs of keeping the land. But bear in mind that inherited land is a windfall that could allow you to realize a long-held dream or generate an additional income stream.
So should you sell your inherited land? The answer depends entirely on your personal circumstances. Does the land have sentimental value? Can you afford the upkeep? Is it likely to increase in value? Are there other things you would like to do with the money you could raise if you sold it?
If you decide to sell, take your time to look at the different options for vacant land sales. Itโs important to be sure you are getting the deal thatโs right for you. Selling vacant land takes time and if you are looking for a quick sale, then a direct land buyer might be a better route. Click here for your cash offer for your inherited land.
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