5 Ways Holding Onto Vacant Land Is Costing You In Raleigh

An investment in undeveloped land may provide you with substantial financial returns. However, keeping it may also result in financial losses, either immediately or in the long run, depending on the circumstances. There are annual taxes and potentially property owner’s association fees to consider, but not as many tax benefits, cash flow, property maintenance issues, and market conditions to consider. Call Present Day Properties at 984-689-9785 to discuss the ways holding onto vacant land is costing you. 

Annual Cost

Even if the cost of purchasing vacant land could be lower than the cost of purchasing a house, you still have to pay annual taxes on it. Your property taxes could be a few hundred or a few thousand dollars, depending on where your land is located and what kind of zoning it has. If you hold onto your vacant land and don’t do anything with it, you might end up paying double or triple what you did for the land in annual taxes and have nothing to show for it but the same piece of vacant land.

Property owner’s association fees are an additional annual cost that may or may not apply. If you bought land in ac community that has an association, you might be required to pay additional fees each year that range anywhere from a few hundred to a few thousand dollars, depending on the type of community, the services that the organization offers, and the facilities that are offered. Also, keep in mind that there is a possibility that your annual tax bill will increase due to the expansion of public utilities or other special municipal projects. These projects could be added to your tax bill and may or may not improve the value of your land.

Tax Benefits

Although owning vacant land is a valuable investment asset, there are fewer tax benefits associated with it compared to owning a single-family home or a commercial property. There is no depreciation that can be claimed on your taxes, and undeveloped land typically does not qualify for any form of a homestead exemption that can be applied to your tax assessment.

Cash Flow

Holding on to vacant land is negative cash flow. You do not possess a structure that can be rented out and for which you can receive regular payments. By turning your vacant land into additional rental space, you may be able to recoup some of the annual tax fees that you are required to pay. However, this will depend on the zoning of the vacant land that you own. You might want to consider purchasing property owner’s insurance if you do anything like this. If something happens to someone on your property while moving or occupying your vacant land, they might file a lawsuit against you. That would be a significant financial burden for you.

Property Maintenance

Holding onto vacant land can also become costly to maintain. If your property is in a municipality, they may require you to keep your property mowed. If you have a lot of trees, they may require you to clean up the brush to guard against fires. If your vacant land isn’t in the best of areas, some dumping might occur on the property, turning it into a miniature landfill! This trash and garbage might cause you to have code violations and can be costly to have it removed. There may also be unknown contaminants or toxic issues on this land that you are unaware of, but once discovered, this might also be costly to clean up.

Market Conditions

Holding onto vacant land can be a big mistake. If you buy your property while the market value is high and hold onto it for too long, the value might decrease more than you expect. Depending on your purchase price, it might cost even more than your annual taxes to hold onto it year after year. You might also be losing hundreds of dollars of market value. 

No matter what your situation, if you own land in Raleigh, NC, call Present Day Properties at 984-689-9785 or send us a message to discuss the ways holding onto vacant land is costing you and what you can do about it. 

Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

Get A Cash Offer Today, Sell In A Matter Of Days...

  • This field is for validation purposes and should be left unchanged.