What To Do With Inherited Land?​

Inheriting land from a relative or family member can be exciting. On the one hand, you may have exciting plans to make use of your newfound asset, while on the other hand, you may feel overwhelmed by the responsibilities that come with it. Before taking any action, however, there are a few things you should consider when deciding what to do with your inherited land.

1. Determine the purpose of the land:

Before you make any decisions about what to do with your inherited land, it is important to determine its purpose. Consider if you would like to keep it as an investment, develop it for potential income from activities such as agricultural or recreational uses, or simply use it for your personal residential use.

2. Research the zoning laws:

It is important to research local and county zoning laws before taking any action with your inherited land. Familiarizing yourself with the rules and regulations of these laws can help you determine what activities are allowed on your property as well as any potential restrictions that may be placed on it.

3. Make a budget and plan:

Once you have determined the purpose of your land, it is important to create a budget and plan for taking action. This will involve researching the costs associated with developing or maintaining the property as well as any potential sources of income that may be available to you. It’s also important to consider any environmental restrictions, such as water or wetland protection laws.

4. Consult with an expert:

It is often beneficial to seek advice from an experienced attorney or land use planner before taking action with your inherited land. They can provide you with valuable insights into local zoning and planning laws, as well as other considerations that may be important when deciding what to do with the property.

Common Situations for Inheriting Land

Vacant Land

You may want to consider turning the land into something more profitable, such as building a home or developing it for agricultural use.

Farmland

Depending on the size and location of the farm, you can choose to keep it as an income-producing asset or develop it for recreational purposes.

Inherited Home and Property

This may involve deciding whether to keep the home as a personal residence, rent it out, or sell it.

Tricky Situations for Inherited Property

Property with Debt

It’s important to understand that you are responsible for any remaining debts associated with the property, and you may need to figure out how to manage or pay off these debts.

Multiple Heirs

If multiple heirs are involved, it is often necessary to come up with a plan that everyone agrees on. This may involve an agreement to divide the property, sell it, and split the proceeds, or agree on a plan for managing it jointly.

Tax Implications

It’s important to understand any potential tax implications associated with inheriting land, as well as how you will handle any related tax obligations. Consulting with a qualified accountant or experienced attorney can be helpful in this regard.

Inheriting land from a relative or family member can involve complex considerations and difficult decisions. However, with careful research and planning, you can determine the best way to use your inherited land that will be beneficial for everyone involved.

What Costs & Taxes are involved?

When inheriting land, there may be costs associated with maintaining or developing the property as well as taxes that need to be paid. Depending on the state of residence, some inheritance taxes are levied on real estate assets and must be paid by the beneficiary. Additionally, you may also incur bills related to upkeep such as mowing, landscaping, and repairs. These costs can be significant and should be factored into your budgeting process before taking any action with the property.

It is also important to consider other taxes or fees, such as capital gains taxes or transfer taxes, that may apply when selling or transferring ownership of inherited land. An experienced attorney can help you understand these potential costs and develop a plan to manage them. 

Finally, it’s wise to form an estate plan that outlines how you would like your assets to be distributed after you pass away. This can help make the process of transferring the land easier for future generations.

Frequently Asked Questions

Can I sell my inherited land?

Yes, you can sell your inherited land if that is the best option for you. However, it’s important to understand any potential taxes or fees associated with selling the property before taking action.

Who has to pay inheritance taxes?

Inheritance taxes are typically paid by the beneficiary of the property. The amount due will vary depending on the state of residence, but it’s important to be aware of any potential costs associated with inheriting land.

What should I do if multiple heirs are involved?

If multiple heirs are involved, it is often necessary to come up with a plan that everyone agrees on. This may involve an agreement to divide the property, sell it, and split the proceeds, or agree on a plan for managing it jointly. It’s important to consult with a qualified attorney if you’re dealing with multiple heirs.

What is the best way to use my inherited land?

The best way to use your inherited land will depend on the size and location of the property, as well as any financial or tax considerations that need to be taken into account. It may be beneficial to consider all available options such as using the land for personal or business use, leasing it out, or selling it. Consulting with an experienced real estate expert can help you make an informed decision about how to best use your inherited land.