If you’ve inherited land from someone, chances are you’re in new territory. Whether or not you have sentimental attachments to the property, there are several financial factors to consider that can help you decide if you want to sell.
First, make sure that any relevant family members with an interest in the property are involved in the discussion. It’s important that everyone reaches a consensus to help ensure a smooth process should you decide to sell.
Five Aspects to Consider Before Selling Inherited Land
1) Taxes – In some cases, inheritance of a property can lead to estate and/or inheritance taxes, also known as death taxes. Additionally, selling the land for a profit later can trigger capital gains taxes. Moving forward, you will probably be responsible for real estate taxes, too. Taxes will vary depending on your situation, so make sure to consult a tax attorney or accountant.
2) Outstanding Liens: If the person who willed their land to you still owed a mortgage on the property, you become responsible for this and any other liens. If you can’t or don’t want to pay this, selling may be your best bet.
3) Fees: Depending on the location of your land, you might be responsible for community fees (such as homeowners’ association fees) even if there is no house. Failure to pay any fees could result in a lien.
4) Maintenance: What’s the annual property upkeep expense? You might need to pay to secure your property, prevent trespassers or perform routine maintenance such as cutting grass.
5) Insurance: If you decide to keep your land, you should have insurance on the property to help protect you against any potential liabilities.
Consequently, if after reviewing everything you decide to sell your inherited land, what are the next steps?
What to Expect From the Selling Process
1) Sign any necessary documents. This is where you’ll be glad any involved family members are on board. If someone refuses to sign, this could seriously delay or even stop the process altogether.
2) Probate the estate. Most likely you’ll have to file probate in order to gain a clear title that can be transferred or sold. This is a legal process that can take a few months and typically requires an attorney. In some cases, a summary probate (which doesn’t require a lawyer and can be finished faster) can be filed for a property of smaller value.
3) Contact an expert. Finding a realtor who specializes in selling land can help make the process as pain-free as possible because they’ll help you market and gather any information potential buyers might want. To get a sense of what they’ll do to help you sell your land, check out these 6 Tips for Selling Land
Inherited land can involve many different financial and emotional considerations that might conflict at times. While this can be a difficult and challenging time, knowing what to expect and having a professional in your corner can help you be well prepared.