What To Do After Inheriting Land in North Carolina

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What To Do After Inheriting Land in North Carolina
By

Bart Waldon

North Carolina is home to many "firsts" in the United States. The University of North Carolina at Chapel Hill was the first public university established in the country, opening its doors in 1795. The state also birthed Pepsi in 1898 when it was invented by a North Carolina pharmacist. In 1903 the Wright Brothers achieved the first successful airplane flight in Kitty Hawk, North Carolina. The Outer Banks area was also home to the lost colony of Roanoke Island, the first English colony attempt in America in the late 1500s. North Carolina enjoys a rich history of innovation, education and exploration.

Inheriting land in North Carolina can be a blessing and a burden. With over 53,000 square miles of land area, North Carolina offers diverse landscapes from the Appalachian Mountains to the coastal plains. While inheriting property may seem like a windfall, there are important steps to take to properly handle the land transfer and decide if keeping or selling the land is right for you.

Understanding the Land Inheritance

If you have inherited land in North Carolina, the first step is gaining a full understanding of what exactly you have inherited. Important factors to research include:

  • Location - Where is the land located in North Carolina? Is it near any major cities or tourist destinations? What county is it located in?
  • Acreage - How many acres are included in the inherited parcel? Large acreages over 100 acres may have more limited selling options.
  • Zoning - What is the land zoned as? Zoning will dictate what you can do with the land. Agricultural zoning is most common for vacant land.
  • Improved vs. Unimproved - Does the land have any structures like a home, barn or other buildings? Improved land may be worth more.
  • Mineral Rights - Does the land transfer include mineral rights or have they been sold off separately? This is common in some areas.
  • Liens or Taxes - Are there any outstanding taxes, liens or judgments on the property? These must be settled before you can sell or transfer the land.

Gaining a full understanding of what you have inherited takes research, including scouring old records and documents and ordering a title search if needed.

Deciding Whether to Keep or Sell

Once you fully understand the details of your inherited real estate, the next decision is whether you want to keep or sell the land. Here are some factors to consider:

  • Intended Use - Do you have a purpose for the land, like building a home or using it recreationally? If not, holding it may not make financial sense.
  • Costs - Holding land isn't free. You must pay annual property taxes and insurance costs. There may also be maintenance like mowing or tree clearing required.
  • Appreciation Potential - While land can appreciate over time, vacant land typically increases value very slowly. Don't plan on dramatic value increases.
  • Market Conditions - In a hot real estate market selling may make sense. In a cooler market, hanging on longer term may be wiser. Consult a local real estate professional on the current climate.

If keeping the land doesn't fit your personal or financial goals, selling is likely the right choice.

Paying Off Any Liens Before Selling

If you decide to sell your inherited property, the next step is taking care of any outstanding debts or obligations attached to the land. This includes:

  • Paying off the remaining mortgage balance owed on the land if applicable.
  • Settling any back taxes owed to the county.
  • Clearing title by paying off any mechanics liens filed for unpaid construction work.
  • Satisfying any judgments against previous owners that attached to the property.

It is critical to handle these issues before listing the land. Buyers will check for clean title and liens can snag a sale. Work with a real estate attorney to identify and properly clear any encumbrances.

Choosing a Method of Sale

Selling vacant land takes legwork and patience. There are several options for liquidating inherited land including:

Sell with a Realtor - Hiring a real estate agent to list and market the property in the local MLS is common. Be prepared to pay the realtor's commission of around 6%.

Sell By Owner - Listing for sale by owner (FSBO) can save on commissions but you have to handle all marketing duties. This works best with smaller, low value vacant parcels.

Auction - Some inheritances of large rural land tracts are sold via auction, allowing multiple competitive bids. Hire an experienced auction company to handle this.

Land Buying Companies - Companies like Land Boss buy land directly from owners for cash fast. This avoids commissions and facilitates fast sale. Rates are often below market value.

Look at the parcel specifics like acreage and value to decide which option makes the most sense.

Timing the Sale Properly

Proper timing is important when selling land. Schedule it when buyer demand ispredicted to be highest in the local market.

  • Spring - Spring and early summer see upticks in vacant land sales as buyers plan summer building plans.
  • Fall - Active sales pick up again in the fall as the weather cools.
  • Avoid winter - Sales are slower in the winter months and inventory is higher.

Work with your real estate agent or check sales data to determine the ideal timing to list inherited property. Patience may be required to optimize sale return.

Using Professionals for Appraisal & Legal Help

Selling inherited land has some complexities that make working with professionals prudent:

  • Lawyer - Have a real estate lawyer review all sale paperwork for accuracy and to ensure proper title transfer. This provides legal protection.
  • Appraiser - Hire an independent appraiser to assess the property's current value and best listing price. Don't assume tax assessment values are completely accurate.
  • Accountant - If the land value is high, discuss tax implications of the sale and inheritance with a CPA. You likely want to minimize taxes paid.
  • Surveyor - For large rural acreage, a survey of boundary lines may be required to settle any disputes for buyers.

While professionals cost money, their services can maximize your financial return and avoid potential legal issues.

Handling Capital Gains Tax

If the inherited land has increased significantly in value since original purchase, selling may trigger capital gains taxes. Work with an accountant and real estate attorney to minimize taxes owed through proper documentation of inheritance date and value. You may be able to exempt some or all of the sale from capital gains depending on your specific situation.

Final Thoughts

Inheriting land can certainly be a complicated process full of legal and financial considerations. However, with proper planning and strategic decision making, unwanted inherited property can be turned into a windfall. Conduct thorough due diligence, explore creative marketing and sales methods, consult needed professionals, and time the sale strategically. With patience and perseverance, unwanted North Carolina land can be liquidated to maximize value. Be sure to weight the pros and cons carefully when deciding whether to keep or sell inherited acreage. With the right approach, inheriting North Carolina property can ultimately be a huge benefit and deliver needed cash into your pocket or investment portfolio.

Frequently Asked Questions (FAQs)

Do I have to accept a land inheritance in North Carolina?

No, you are not required to accept inherited property if you do not want it. You can disclaim or refuse an inheritance of real estate in North Carolina. Consult with an attorney on the process.

How long do I have to decide what to do with inherited land?

There is no set timeline, but most experts recommend deciding within 12 months. The longer you hold, the more carrying costs can accumulate. Act swiftly but carefully.

Can I sell inherited property if I'm not on the deed?

No, inherited property must have the deed legally transferred to your name before selling to pass clean title. Work with an attorney to record the change.

Do I have to pay taxes when inheriting land in North Carolina?

Inherited land is not subject to state inheritance tax, but you may owe capital gains taxes if selling land that has significantly appreciated. Discuss any tax implications with a CPA.

How do I determine the market value of my inherited acreage?

Hire an independent certified appraiser to assess the property's current value. Don't rely solely on tax assessment valuations which are often outdated. Accurate appraisal is key.

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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