What To Do After Inheriting Land in Georgia

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What To Do After Inheriting Land in Georgia

Bart Waldon

Receiving that fateful attorney notification you’ve inherited property interests puts most heirs in unfamiliar legal territory, particularly those surprised finding land deeds now among newly acquired assets. And for Georgians, recent agriculture valuations confirm even rural acreage can carry significant and rapidly appreciating market values—over $4,470 per acre on average at the outset of 2023 according to USDA appraisals, a nearly 400% spike over just the past decade! With heirs holding little familiarity of land management intricacies including taxation, parcel boundaries or optimal monetization methods now compelled responsible stewardship over inherited sites, missteps prove common. 

Attempting land sales devoid experience invites leaving substantial wealth unrealized. Alternatively, retaining land absent strategic plans allowing full utility simply drains fiscal resources through unnecessary carrying costs. But drawing upon certain professional partners lends heirs otherwise lacking agriculture, development or forestry specialties useful perspectives securing optimal positioning for inherited rural Georgia real estate assets matching intentions and risk profiles suitable honoring the giver’s legacy.

Get Your Affairs in Order

The first step is gathering all the paperwork associated with the land and getting your affairs in order. This includes:

  • Obtaining the deed - Make sure you have the original deed transferred to your name to prove legal ownership. The deed contains vital information like the property's legal description.
  • Reviewing property taxes - Check if there are any delinquent taxes owed on the land. You don't want to be surprised by a tax bill later on.
  • Checking for liens - Do a title search to see if there are any loans, claims or judgements attached to the property through liens. This needs to be settled before you can sell or transfer the land.
  • Updating records - File a new deed with the county clerk to update ownership records. Also update the land's tax records and insurance policies to reflect the change.

Getting these documents squared away establishes you as the rightful owner and prevents problems later. Consult a real estate attorney to ensure it's done properly.

Learn About the Land

Now it's time to learn everything you can about the inherited property. Important things to find out include:

  • Size and boundaries - Obtain a professional survey to verify the acreage and boundaries if they are uncertain. Check if there are any encroachments from neighbors.
  • Zoning and use - Contact the local planning department to learn about zoning restrictions, intended land use and possibilities for rezoning.
  • Utilities availability - Research what utilities like electric, water and sewer access are available or need to be added. This affects how the land can be used.
  • Assets - Inspect the property to identify all existing structures, equipment, mineral deposits or other resources that add value.
  • Environmental issues - Look for potential problems like contamination, erosion, flooding or protected species habitats. This could impact redevelopment.

Once you understand the land's attributes, you can strategize more effectively.

Decide What to Do With the Land

Inherited land offers many possible uses, including:

  • Selling the land as-is
  • Building a home to live on or rent out
  • Farming or ranching
  • Mineral or gravel extraction
  • Commercial development
  • Industrial use
  • Recreational property like a hunting preserve
  • Donating or dedicating an easement to a land trust

Weigh your options carefully based on factors like:

  • Location - A scenic or convenient location offers more possibilities than an isolated tract. Proximity to city centers or leisure destinations is ideal.
  • Costs - Consider expenses to improve the land to add value versus the return on investment.
  • Market conditions - Research area market trends to see if there is demand for say, rural homesites versus farmland.
  • Permitting - Ensure your intended use is permitted before committing. The feasibility of rezoning should also be evaluated.
  • Personal goals - Do you want to build a family homestead or sell for maximum profit? Match plans to your interests.

Consulting local real estate professionals can provide objective insight on the highest and best use. An appraisal is also wise to establish fair market value.

Pay the Taxes

Don't let inherited property become a tax liability. Property taxes are due yearly and the bill is now your responsibility. Missing payments can result in thousands in back taxes, penalties and interest and even tax lien foreclosure.

Review the tax assessor’s appraised value and appeal it if seems excessive. Ask about any tax breaks for agricultural, forested or conserved land. Consider setting up an escrow account to pay taxes automatically.

Staying on top of taxes keeps your ownership on good footing.

Increase the Value

In some cases, it pays to invest in improvements to increase the market value of inherited land. Possibilities include:

  • Clearing brush and removing debris
  • Fixing or demolishing dilapidated structures
  • Building access roads
  • Installing fencing or gates
  • Doing environmental remediation
  • Extending utility services

Upgrades like these can elevate a raw, vacant parcel into a development-ready site. But carefully project costs against expected valuation gains. Improvements should enhance salability to merit the expenditure.

Decide Whether to Keep or Sell

A major decision is whether to keep the inherited property or sell it. Holding onto land you have limited use for may be an idle waste. But selling may trigger substantial capital gains taxes.

Possible factors favoring sale include:

  • The land is a financial drain due to taxes, upkeep costs or liabilities.
  • It lacks personal value to you.
  • You need cash to pay off debts or fund other goals like college or retirement.
  • You determine the property’s value exceeds what you can reasonably earn keeping it.

On the other hand, you may want to retain land that:

  • Has sentimental ties to family history or memories.
  • Could become a future homestead for retirement.
  • Provides reliable rental income from tenants.
  • Is appreciating rapidly as a real estate investment.

Think strategically about whether the land is worth more as a sale or long-term hold.

Pay Off Debts

If you choose to sell inherited property, a smart initial use of proceeds is paying off debt. This may include:

  • Mortgages or loans on the land itself
  • Liens for overdue property taxes
  • Credit card balances
  • Personal, business or student loans
  • Any other outstanding bad debts

This cleans up your finances and eliminates the drag of interest payments. Paying off secured debts also releases any liens on the land so the title is clear for sale.

Prioritize debts with the highest interest rates first. This will maximize savings over time.

Explore Creative Land Transfer Alternatives

Rather than a traditional sale, there are creative ways to gain value from your inherited land without losing it entirely. Options include:

Land leases - Leasing usage rights allows temporary income from activities like farming, drilling, mining or hunting without relinquishing ownership.

Installment sale - Selling with owner financing allows you to recognize gains gradually while earning interest income long-term.

Undivided interest sale - Selling just a percentage of full ownership shares income while retaining a vesting interest.

Conservation easement - Donating an easement that prohibits future development can provide sizable tax deductions.

Trade for other real estate - Trading your land for income-generating property can let you exchange one asset for another.

Consult your advisors to explore strategies that meet your financial and personal goals regarding the land.

Recruit Help to Sell

Selling vacant land on your own is challenging. Partnering with professionals can ease the process. Service providers to consider include:

  • Real estate agent - Hiring a knowledgeable local agent is ideal for marketing the property and bringing in buyers. Expect to pay a commission.
  • Land broker - A specialist land broker focuses on advertising and negotiating land deals full time. Their expertise is invaluable.
  • Land trust - Nonprofit trusts can purchase select properties for conservation then manage or resell them.
  • Land buying company - Companies like Land Boss purchase land directly from owners at competitive prices for cash.

The right partner can handle advertising, showings, price negotiations, contracts, and closings for you turnkey.

Maximize Sales Proceeds

To help get full value for your inherited real estate:

  • Boost marketability - Increase appeal by doing light clean-up, enhancing access and removing eyesores.
  • Get multiple valuations - Appraisals, brokers’ opinions of value and assessment records give price benchmarks.
  • Have a firm asking price - Set a price at the upper end of the expected fair market value range based on data.
  • Offer owner financing - Carrying a mortgage yourself may earn a higher price.
  • Consider tax implications - Strategies like a 1031 exchange can let you defer capital gains taxes on the sale.
  • Market extensively - Use print ads, online listings, signs and social media to generate interest.
  • Be prepared to negotiate - Most buyers will submit offers below list price. Plan your counter strategy.
  • Act fast on legitimate offers - Don’t let a good deal languish without responding promptly.

Proper planning and pricing helps you earn top dollar on a sale.

Pay Any Capital Gains Taxes

If you sell real estate you inherited for more than you were gifted it for or paid in taxes and other costs, you will likely owe capital gains taxes on the appreciation. The long-term capital gains rate varies by income and profits, ranging up to 20% federally. State taxes may apply too.

Some ways to manage tax liability include:

  • Claiming your tax basis is the current fair market value to minimize capital gains.
  • Deducting expenses from the property's sale price to reduce taxable profit.
  • Handling the sale through a 1031 exchange to defer taxes.
  • Donating or establishing a conservation easement on a portion of the land.
  • Selling just a partial interest to spread gains over multiple years.
  • Holding the property long enough to qualify for a tax break on inherited real estate.

Careful planning and timing around the tax impacts can help ease the burden.

Invest or Gift Proceeds

After addressing taxes, you have choices on how to use net proceeds from selling inherited land. Possibilities include:

  • Paying off your own debts
  • Funding retirement accounts
  • Building an emergency savings account
  • Starting a college fund for kids or grandkids
  • Investing in other appreciating real estate or assets
  • Starting or growing a business
  • Traveling or indulging in desired luxuries
  • Donating to a charity or church
  • Gift money to loved ones tax-free

How you apply the windfall depends on your personal and financial goals. But use wisdom to make it count.

Get Help Making Decisions

Even for experienced real estate investors, inheriting land involves unique decisions. Don’t feel like you need to tackle everything on your own. Seek guidance from:

  • Real estate attorneys - for navigating titles, deeds, zoning and other legal aspects
  • Tax professionals - for accounting for basis, managing gains/losses and filing properly
  • Financial advisors - for strategizing on optimizing inherited assets
  • Land management consultants - for evaluating development possibilities
  • Land buying companies like Land Boss - for exploring quick and easy cash-out options

The right team provides a soundboard to help you make informed choices.

Take Your Time

Don't feel rushed into hasty decisions about inherited land before you've done thorough due diligence. With vacant land, you may be able to take your time to plan smart next steps. Get educated on all the issues and possibilities first.

While a lucrative offer may be tempting, the full potential value is often not immediately apparent. With patience and prudent moves, inherited land can become a true windfall.

Final Words

Inheriting property may seem like a straightforward bonus. But managing land profitably and tax-wisely involves important choices. Get your paperwork organized, research the property thoroughly and explore creative directions. A trusted team of financial and real estate experts can help guide optimal outcomes. With proper long-term strategies, your inherited land can become a true gift that keeps paying dividends for years to come.

Frequently Asked Questions (FAQs)

If I inherit land in Georgia, do I have to live there or be a Georgia resident?

No, there is no requirement that you must be a Georgia resident or relocate there to inherit and own land in the state. Non-residents can freely inherit and retain ownership of Georgia property.

How quickly do I need to transfer inherited property into my name?

There is no firm time limit, but it's advisable to file a new deed recording your ownership with the county clerk fairly promptly to avoid potential legal disputes. Taking over a year or more could complicate proving your inheritance rights.

What taxes will I owe on inherited land?

You'll be responsible for ongoing property taxes. If you later sell at a profit, capital gains taxes will apply. But inheritance itself does not trigger income taxes.

Can I claim farm tax exemptions on inherited rural land?

If the land qualifies for agricultural use exemption and it’s your primary residence, you may be able to claim applicable tax breaks. But investment properties don’t qualify for farm exemptions.

How much can I deduct from sale proceeds for costs on inherited land?

Expenses directly linked to selling the land can reduce taxable capital gains, including commissions, fees, property taxes and carrying costs. Improvements cannot be deducted but increase your tax basis.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.


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