What To Do After Inheriting Land in Virginia

Inheriting land in Virginia can open up a world of possibilities, but it also comes with its fair share of responsibilities. Whether you've received a sprawling farm, a wooded lot, or a slice of suburban real estate, knowing your next steps is crucial. Recent data from the USDA shows that Virginia's farmland values are on the rise, with the average acre worth $5,300 in 2023 - a 7% jump from just a year earlier. It's not just farmland that's valuable here; the Virginia Department of Forestry notes that over 60% of the state is covered in forests, hinting at the diverse potential of inherited land. If you've recently become a landowner through inheritance, you're probably wondering what to do next. This guide will walk you through the key considerations and actions to take, helping you make informed decisions about your new property in the Old Dominion.

Verify Ownership

When you inherit a piece of land, step one is to collect all the paperwork proving ownership. Tracking down the title deed is crucial – this legal document transfers the property to your name. Check that the legal description matches the physical boundaries shown on the plat map you acquire. Also gather records from the tax assessor's office showing you are now responsible for paying the annual property taxes.

Don't stop there. You need to verify if any claims or issues are associated with the land. Search probate filings to see if any other heirs are contesting your inheritance rights. And scan court records for any easements, liens, mortgage assignments or title disputes that could affect the property. It's better to identify potential complications early rather than be blindsided later.

If you inherited through a trust or will, get the contact info for the estate planning attorney who handled the process. Call and request copies of all paperwork confirming the asset was deeded to you. Having the inheritance affidavit and other supporting documents will prove ownership if any disputes arise.

Organizing this paperwork trail is tedious but necessary. Make copies and store in multiple secure locations in case originals get damaged or lost. Proving ownership is the essential first step to properly managing your inherited land.

Inspect the Property Thoroughly

Once you've confirmed ownership, it's wise to plan a trip to Virginia to see the inherited land in person, especially if you've never visited before. There's no substitute for walking the ground when assessing condition and investigating potential issues.

Schedule a day when you can thoroughly traverse the property lines. Bring along the deed description and plat map to help spot survey markers and iron pins indicating boundaries. Watch for any encroachments from neighbors like fences or structures over the line. Also check for any squatter buildings or unrecorded easements crossing the land.

As you walk, take time to examine the topography and features up close. Make careful notes about vegetation, sloping and drainage, access points, utility lines and any existing improvements. Document important attributes like large stands of mature timber, creek beds, existing trails or access roads that provide ingress.

While visiting, try to connect with neighboring land owners in person if possible. Introduce yourself and ask their perspective about the property. They may share helpful context like plans for adjacent parcels or know of utility rights of way affecting the land. Building rapport with neighbors is mutually beneficial.

Be sure to thoroughly document everything during the site visit with photos, videos and detailed notes. Seeing the inherited land firsthand provides insights that paperwork alone can't reveal. Capturing details will help refresh your memory later when evaluating options and making decisions.

Research Local Zoning Laws and Regulations

One important step is researching the zoning and land use regulations that apply to the inherited property. Development potential greatly impacts land value, so you need to understand what's permitted.

Contact the local county or city planning office to ask about the specific zoning classification for the parcel. In Virginia zoning determines what can be built or operated on the land, covering everything from residential dwellings to commercial buildings to agricultural uses.

While contacting the planning office, also inquire about necessary permits, height allowances, required setbacks from property lines, utility and public access easements, any environmental assessments needed, and other ordinances that might restrict development or usage. For instance, a stream running through the property may limit construction nearby.

Make a list of all applicable rules, permits and restrictions based on how the land is currently zoned. Then verify with the planning office whether rezoning for other uses is a possibility. The existing zoning limits what you can do, so gathering this information will be key to informing your decisions.

Knowing the ins and outs of the zoning and permitting process provides important context as you evaluate options for the inherited land.

Have the Land Appraised

Before weighing your options, it’s essential to establish the market value of the inherited land. Hire an accredited appraiser to assess the property based on recent comparable sales, location, access, zoning, site improvements, mineral rights, timber value and other metrics.

An appraisal will provide a detailed estimate of the land’s current worth. This will help you set an appropriate asking price if selling or determine financing options. Get quotes from multiple appraisers for the best accuracy.

In addition to the appraisal, do your own research on local land values. Check real estate listings to see sale prices for similar vacant land nearby. Just keep in mind that list prices often differ from the actual closing value. Refer to public records of deeds and tax stamps to gauge true sale value.

Review All Applicable Taxes

Taxes represent one of the carrying costs of owning land. Make sure you understand the potential tax implications when inheriting property in Virginia:

• Income Taxes - In most cases, the tax basis is “stepped up” to the market value as of the previous owner's date of death, which minimizes taxes if you sell right away. Consult a tax professional to determine your specific liability.
• Property Taxes - You will be responsible for paying annual property taxes on the land and any buildings or improvements. Review assessments and rates to estimate costs.
• Capital Gains Tax - If you sell for significantly more than the stepped-up tax basis, capital gains taxes will apply on the difference. An accountant can advise on reducing your burden.
• Estate Taxes - Large estates may owe federal or state estate taxes. An experienced probate attorney can determine if any estate taxes are due on the land asset.
• Conservation Easement Tax Incentives - Donating or selling a conservation easement may provide income, property or estate tax deductions.

Thoroughly understanding the full range of tax implications will help avoid surprise liabilities down the road.

Title Insurance is Critical

One of the first things to do when inheriting land is purchasing a title insurance policy. This specialized insurance provides coverage in case issues develop over the legal right to ownership of the property. It protects against claims made against your title.

For instance, a distant relative could come forward claiming they have a right to the land. There could be mistakes made in the legal property description when filed. An undisclosed lien or judgment against the previous owner could surface. Title insurance would cover the legal expenses to defend your ownership interest.

Unlike most insurance, title policies pay claims related to past events, not just future issues. This ensures clean title so you don’t encounter problems selling or financing the land later. Getting adequate title insurance coverage is highly recommended when inheriting property.

Weigh Your Options

Once you’ve done your due diligence, it’s time to decide what to do with the inherited land. Here are some of the options to consider:

Sell the Land

Taking this route provides immediate access to the equity for other priorities. You can sell to a traditional buyer or real estate investor through a realtor. Or opt to sell directly to a land buying company for a cash offer. Consider whether you want lump sum cash or installment payments over time.

Hold and Use the Land

If you want to retain ownership, you may be able to put the land to productive use. Farming, logging, leasing to hunters, developing natural resource reserves, or building rental properties are potential avenues for income generation.

Trade the Land

Explore a land swap with government agencies, conservation groups or other owners. Trading your inherited land for a different property may better match your goals. This avoids having to outright sell the land.

Donate/Conservation Easement

You can donate or grant a conservation easement on the land for tax benefits while retaining ownership. This permanently protects the natural landscape and resources by limiting development.

Develop the Land

If zoning allows, you may want to build on the land for personal use or investment income. This could involve residential structures, storage buildings, recreational facilities, retail space, and more. However, development costs tend to be high.

Carefully weigh the pros and cons of each scenario before deciding. Factor in expenses, time commitments, tax implications, personal interests, and market conditions when choosing the ideal course of action for your inherited land.

Assemble a Knowledgeable Team

Since inheriting property is full of legal, financial and practical complexities, make sure to engage qualified professionals who can offer expertise and assistance:

• Real estate attorney - Handle title transfers, review sales contracts, address disputes that arise.
• Tax accountant - Provide advice to minimize income, estate, property and capital gains tax liabilities.
• Forestry consultant - Assess timber resources and determine logging or conservation opportunities.
• Civil engineer - Evaluate development potential and estimate infrastructure improvement costs.
• Realtor - Accurately price the property, market it effectively, and broker the sale if selling.
• Land management company - Oversee leasing, conservation arrangements, maintenance and general supervision.

Relying on the right team of experts will give you confidence that you’re making the smartest decisions when inheriting land in Virginia. With proper planning and guidance, your unexpected land acquisition can become a fruitful asset for years to come.

Final Thoughts

Inheriting land can be a complicated process full of legal, financial and practical considerations. By taking the right steps upfront to confirm ownership, understand zoning restrictions, assess market value, and evaluate your options, you can make informed decisions. While inheriting property might seem daunting at first, doing thorough due diligence, seeking expert guidance, and exploring creative usage ideas can turn your unexpected acquisition into a valuable asset. With vision and proper planning, inherited land in Virginia can become a wonderful gift rather than a burden. The key is approaching each step methodically so this life-changing event becomes a long-term benefit.

Frequently Asked Questions (FAQs)

What taxes will I owe when inheriting land?

You may owe capital gains tax if you sell the land for more than the value at the time of death. Annual property taxes will also apply. Estate taxes may be due for large inheritances. A tax professional can advise you on minimizing taxes owed.

Should I get title insurance when inheriting property?

Yes, title insurance is highly recommended to protect against claims challenging your ownership rights. It provides legal defense if issues later arise.

How can I determine the market value of inherited land?

Hire an accredited appraiser to assess the property's value based on factors like sales of comparable land nearby. Also research actual selling prices recorded in deeds to estimate worth.

What expenses are involved with inherited land?

Ongoing costs may include property taxes, insurance, maintenance fees, utilities, and mortgage payments if financing. Development costs are high if improving the land.

How long does it usually take to sell inherited land?

Depending on market conditions and listing price, it typically takes a minimum of 6 months to a year to sell vacant land. Some parcels take 2 years or longer to find the right buyer.

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