Author Topic: Inherited Land  (Read 4429 times)

drunken buddha

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Inherited Land
« on: September 01, 2014, 06:02:31 AM »
My uncle left me some land, around 11 acres. I'm not sure what to do with it, but paying taxes on it these last 2 years without the land earning its keep in any way is not something I want to continue. Selling it in this economy, with no new construction going is PROBABLY not going to bring much, if an offer at all. I'd kinda like to keep it anyway, it's neat tromping around on it playing land baron! I'll describe it the best I can so as to not get berated for being vague - it has been logged around 8 to 10 years ago. The loggers left a damn mess of laps. It has 2 good branches running through it, the loggers left the trees along them, it's a law to prevent erosion I think. It is a good 10 miles from town, but only a mile or so from interstate. It was to be a part of a subdivision of smallish brick houses. I drive through it to get to the land. Power pole goes to the land and stops there. I have the plat to the planned road through it, shows like 30 lots with a cul-de-sac at the end. Maybe they decided to stop there because of the 2 branches to cross, I don't know.
I've thought about trying to put solar panels on it, Duplexes to rent out, maybe even building "tiny" houses to rent out to hippies letting them commune with their very own garden plot. The mind wanders, eh?
Oh, it's in 5 different squares of a couple acres + - apiece if that helps. So, what do you think, mustachians? I'm quite sure there is some way for it pay for itself, just not sure what that is. 

drunken buddha

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Re: Inherited Land
« Reply #1 on: September 01, 2014, 06:16:14 AM »
I welcome vague answers BTW. Anything to stir the pot!

Retired To Win

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Re: Inherited Land
« Reply #2 on: September 01, 2014, 06:32:12 AM »
Since you inhereited the land, your cost basis for it is zero.  Whatever you could sell it for would therefore be pure profit.  If paying taxes on it is an issue, I recommend just selling it.  As I said, your cost basis on it is ZERO.

On the other hand, if you think the land could become a worthwhile investment for whatever reason, then start amortizing your tax costs.  Stop looking at them as an expense, and think of them as your accruing cost basis for the land.  You're not pointlessly spending the money; you are investing it in an asset that you hope will yield you either an income or a profit down the line.

Good luck, whichever way you choose to go.

drunken buddha

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Re: Inherited Land
« Reply #3 on: September 01, 2014, 06:53:10 AM »
A good way to think of it, R T W.
If housing picks back up, It'll be a good asset I'd say.
I've thought about selling our place, and building up there. Fence it in and raise something - llamas, goats, chickens, "hemp", a ruckus, cane, dental floss, etc. But where I'm at is peaceful and paid for. I can pee off the porch with no witnesses, what more could I ask?

theadvicist

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Re: Inherited Land
« Reply #4 on: September 01, 2014, 08:08:15 AM »
New here, hi everyone!

With regards to building something for yourself on the land, I'd ask: if you were looking to purchase a piece of land, is this the one you would buy? If not, sell it, and buy the right one. Just because something is free, doesn't mean you have to use it. Also, where you are sounds pretty good already!

I'd probably keep the land for when the housing market heats up again and you can develop it for houses (but I'm in the UK where we have strict planning regulations, and not much land. Housing will almost always be an excellent money maker here, provided you can get permission, so what I'd do probably won't translate across the pond). Nice problem to have, in any case!

drunken buddha

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Re: Inherited Land
« Reply #5 on: September 01, 2014, 08:45:24 AM »

(((Nice problem to have, in any case!)))

So true, a blessing!
It would be more elbow room than I have now, but further away from town. Way too far to bike for groceries, anyway. So, will cross out moving there. I just e-mailed a solar co. in Asheville NC about perhaps a solar farm. Will never know if I don't inquire.
Thanks theadvicist!


MgoSam

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Re: Inherited Land
« Reply #6 on: September 01, 2014, 09:14:06 AM »
Couples things to consider:

a. Where is it located? Real estate is always about location, so is it in a desirable area? If it is a rural area, is it near where development might be heading towards? I have a friend in upstate NY that is holding onto land because they believe that development will head into that direction in the next decade, they are willing to pay taxes on the land because they think it will be an investment that will pay off.
b. Any personal uses that you can make on it? Remember that with land, they aren't making any more of it. It is a finite resource. Is it good farm land? If not selling it, could you lease it to someone, at the least someone that can cover the ongoing expenses until it becomes more valuable?
c. There may be a tax treatment for in-kind exchanges (can't remember the exact term), or the precise way it functions. But essentially the idea is that you can sell an asset for something that provides a similar function and not need to pay taxes on the gain. I would talk to a CPA about this before considering, but if you think the land isn't valuable but would like land in a different area, you might be able to sell your land and use the proceeds to purchase land elsewhere and avoid paying taxes. Again please see a CPA, as this idea is something I recall reading about many years ago, and so I may be completely wrong on how it works or it may no longer exist.

MrsPete

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Re: Inherited Land
« Reply #7 on: September 01, 2014, 10:15:35 AM »
I think you need more information:

- Talk to a real estate agent to see what it could sell for.  Investigate what you could get if you sell it as one chunk vs. what it could sell for if you divide it into lots.  Also investigate what it could sell for if you partner with a developer and build spec houses to sell.  LOTS of people are not interested in putting in the time and effort of building a house for themselves, yet they want a new house. 

- How's it zoned?  If houses are already built on adjacent land, is this area ripe for a grocery store and other businesses? 

- Talk to an accountant and see what tax implications all of the above would have for you.

- Talk to your local land bureau and find out if you can make money (or get a tax break) by renting it to a farmer or by planting trees.  Here's what I do:  I have a rather large piece of land, which my co-owner and I rent to a farmer.  He does the work, and every December I get a check -- not much, but after I've paid the taxes, it's around 2K for me and another 2K for my co-owner (do note that in bad years it's not enough to pay the taxes).  He keeps most of the money, but then he did the work!  This allows me to keep the land without dipping into my own pocket. 

- Look into other business options for the land; for example, you can make money by putting a cell phone tower on it.  Building duplexes could be a great option. 


And don't do anything until you're sure.  Land isn't an easy thing to sell, but you'll never have it back again either -- so be slow and cautious in your decision-making process.

Nords

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Re: Inherited Land
« Reply #8 on: September 01, 2014, 10:54:16 AM »
I'm not sure what to do with it, but paying taxes on it these last 2 years without the land earning its keep in any way is not something I want to continue.
Maybe you could reframe the issue to feel better about it.  How do the taxes compare to the expense ratios on your other investments?  What percentage of the land's value are you paying in taxes?

Can you get a tax break for the land being unimproved?  You probably don't want to re-zone it to conservation, but it's worth checking that you're paying the absolute minimum you're required to pay.

Most solar contractors form a local business association or lobbying group.  Instead of writing to companies that might not be interested (or might not have the skills) you could contact the association for referrals. 

On Oahu, 11 acres of vacant arable land would immediately be rented to a farmer.

If this property is causing you an ownership hassle then maybe it's worth selling now and taking your future strolls in state parks... inheritances are intended to be assets, not burdens.

drunken buddha

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Re: Inherited Land
« Reply #9 on: September 01, 2014, 04:05:28 PM »
Just checking back in to see very helpful comments, most of which I hadn't considered. Thanks to all of you for responding, now to navel gaze upon all angles -

bugbaby

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Re: Inherited Land
« Reply #10 on: September 01, 2014, 05:00:12 PM »
how about sell , say 10 acres and use proceeds to develop the remaining one