Dear Pay Dirt: My grandmother, on the other hand, insists that this land will become more valuable over time.
I’m having a problem with a generous gift that I received from my grandmother. Before downsizing and moving into a condo, my grandmother lived on a 14-acre property in the middle of the woods.
About a year before she decided to move out, she purchased a smaller plot of land that abutted her property. She bought it in my name as a gift and paid $22,500 for it. I have been paying about $120 in taxes on it each year ever since. This fall, she finished paying off the property, so I decided to sell it. It turns out that the land was only valued at $8,000, it’s totally undeveloped, and nobody wants it. Local realtors won’t touch it, the neighbors don’t want it, and even those “we buy land” websites aren’t interested. At this point, I would be thrilled to get $5,000 for it, but mostly I just want to stop paying taxes on land that I don’t use and don’t especially want.
It’s one thing to want not to be burdened by a property you didn’t ask to own. But you need to decide how bullish you want to be on the property’s future if you decide you want to keep it as an investment. Your $120 annual property taxes is a low carrying cost if you think long-term potential exists.
I also wonder how you determined the property is only worth $8,000—clearly, the property was worth more when it sold because your grandma paid more for it. If the last seller could get $22,500 for the land, that was the market price. While the county may have assessed the lot lower , the market value is determined based on what a buyer is willing to pay. A change in development laws or a neighbor’s interest in expanding might shift the property’s market value.
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