How Property Taxes Apply to Vacant Land

by Laura Mueller

Property taxes apply to all land investments, regardless of whether you’re living on the land, building on it, or making an income off of it. That means that if you own vacant land, you’re going to have to pay property taxes on it—though you may also be eligible for some pretty decent deductions.

Here’s what to know about property taxes on vacant land, plus a quick look at what types of deductions you might be eligible for.

How property taxes are calculated on vacant land

The amount of property taxes that you owe on vacant land are calculated by your county tax assessor and are usually based on the “best and highest use” potential of the plot—i.e. its most profitable use. Even so, you can expect that the amount you’ll owe for vacant land is much less than the amount you’d owe for improved land.

Depending on where you live, you may have state specific rules that govern property taxes on vacant land and how much they can increase year after year. In California, for example, Proposition 13 dictates that the assessed value of your vacant land cannot go up by more than 2% in any given year, regardless of other changes that may have impacted its use and profit potential.

What if you disagree with the assessed value of your land?

It’s not uncommon for land owners to find themselves facing higher property taxes than they anticipated. As a good rule of thumb, it’s always a good idea to look at the property tax history of a plot of land prior to purchasing it so that you can get a heads up on what you’re in for. But if you buy vacant land and think the assessed value is too high—or if you think it’s gone up too much in the past year—then you do have some potential recourse.

To appeal your property tax assessment, start by digging into the data. Pull up your property’s record card and look for discrepancies in the description of your land, since if they exist you should have no trouble getting a fast adjustment. If that doesn’t work, look to the comps and your land itself to make a case for why the assessed value is too high. You can then take this information to your county, where you’ll go through a formal appeal process.

Note that you’ll likely face limitations on when you can appeal your vacant land property taxes. For instance, expect that you won’t be able to place an appeal until a new assessment comes out after purchasing, and that from there you may have between 30 and 90 days to launch your case.

Vacant land tax deductions

On the bright side, as a land investor you are eligible to write off certain expenses related to owning your vacant property, and that includes your property taxes. You can also write off the interest that you pay on your land loan. Both of these expenses will go on your Schedule A tax form, which covers personal itemized deductions.

Keep in mind that under the Tax Cuts and Jobs Act (TCJA), certain deductions that used to be standard for investors of vacant land—think improvements, maintenance fees, and legal and accounting fees—are no longer viable write-offs unless you are a land dealer purchasing property for a quick turnaround sale.

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by Caroline Kirby

Depending on where you live, you’ve likely spent the better part of 2020 being stuck inside. Couple that with historically low mortgage rates and a change of scenery, and it’s no surprise that we’re all itching to get out of the quarantine bubbles we’ve been in. The desire to get out has led many to look at buying a vacation property.

Have you found yourself scanning real estate in your favorite vacation areas only to pull back and wonder if now is even the right time to make big purchases? There’s a case to be made for purchasing vacation property at this time; let’s look at why.

Although real estate is typically regarded as a sound investment, the Covid-19 pandemic and its effects on society and the economy have left many wondering if that still stands true. However, if you plan on keeping this new property for the long-term, it’s worth looking at the pros of making the purchase.

• Low Interest Rates: While the economy is expected to go through a few cycles in the coming years if your family has income stability, then making a purchase on a second home makes sense. With the right financial strategy in place, it could be a smart move. Discuss your options with your realtor and financial planner before making any big decisions.

• Supplement Costs by Renting: Do your research before relying solely on rentals for income, but just as you’re looking to get out, so are many others. If your vacation property is in a place with light travel restrictions, then with the right precautions, you could realistically rent out your place when you’re not using it. And don’t forget about the tax advantages if you rent!

• A Change of Scenery: As many people are able to work remotely or are schooling virtually, it may be nice to have a change of scenery and work or study from your vacation property. Additionally, if you live in a city or a highly-populated community, finding a vacation spot that is a little more isolated could also be comforting for those that are social distancing.

• More Space: Going off of the point above, many households are finding that they’re more crowded full-time with both partners now having to work from home. If that’s the case for your family, you know how important it is to have some space to get your work done and live comfortably.

• Off-Season Purchases May Yield a Deal: Many popular vacation areas were prohibited from renting short-term in an effort to help stop the spread of Covid-19. If you look at purchasing during off-peak tourism season, you may be in a better position to snag a deal.

These four reasons are a good introduction to why buying a vacation property is a good idea. However, know that vacation homes across the U.S. have been selling fast as many people are finding that they can work from anywhere while also hoping to get out of the cities where they live.

There’s no harm in looking— browse through’s current listings to see what’s out there!

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by Caroline Kirby

Opportunity Zones have been a hot topic of interest ever since their creation by the Tax Cuts and Jobs Act on December 22, 2017. Even though it’s been nearly two years, the real estate industry is buzzing with questions around what it means and how to create profitable opportunities from them.

If you want to learn more about these opportunities and get full advantages, you need to understand some basics.

Opportunity Zones Explained

The IRS explains Opportunity Zones as “an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment.” They were created to encourage economic development and job creation in distressed communities.
These areas must be nominated by the state and then certified by the Secretary of the U.S. Treasury (who has been designated authority by the IRS).

The first set of Opportunity Zones were established in April of 2018 and spanned across 18 states. Since then, zones covering parts of all 50 states, the District of Columbia and five U.S. territories have been assigned.

Now that we’ve covered the basics, let’s get into the significant parts. You don’t need to be a tax expert to understand the benefits, but it can be complex. To receive full benefits, you may consider consulting a tax professional. Two important things to note are:

1. Investors don’t need to live in an Opportunity Zone to get tax benefits.
2. You must invest in a Qualified Opportunity Fund (QOF) to receive the benefits.*

*The QOF is an investment channel that is set up as either a partnership or corporation for investing in eligible property.

What can investing in a Qualified Opportunity Fund do for you? Here’s a quick rundown of some significant points:

Gain Deferral:

Capital gains reinvested (within 180 days of a sale to a non-related person) into a QOZ are tax-free as long as they are held in the program, through 2026.

Tax Exclusion for Investments Held for 5 Years:

If held for five years, the tax paid on the reinvested gains is reduced by 10%; if held for seven years, that reduction is increased to 15%.

Permanent Tax Exclusion of 100% of Taxable Gain:

Gains accrued on deferred-gains funds while invested in a QOZ are tax-free if they are held for at least ten years.

Check out LandHub’s current listings and blog for inspiration. Opportunity Zones provide a unique chance to enjoy returns, save on taxes, and stimulate economic opportunity depending on how you use your new land.

If you’re looking for more insight into Opportunity Zones, their purpose, the regulations and policies, as well as actionable steps on how to leverage this information to create value check out this webinar from Realtors Land Institute.

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by Caroline Kirby

Do you have available acreage and no plans on how to use it? You should consider leasing your land for solar power projects! In the last few years, farmers across the country have been approached by solar companies looking for open land to lease for their solar projects.

Using your land for a solar farm could bring a lot of benefits. Here’s what you need to know!

The Basics of Leasing Land for a Solar Farm

Solar land leases are a contract between a landowner and a solar developer. The solar developer is leasing your land to install photovoltaic (PV) solar arrays to generate electricity. While the electricity from these systems does not benefit the landowner, the landowner will still enjoy the benefits of receiving lease payments.

There are many considerations to address when deciding if leasing to solar developers is the appropriate option for you. Every state has different regulations as do the local communities. Before entering into a lease agreement you will need to research your local laws and restrictions as well as garner community support, if applicable to your land’s location.

What Are the Benefits of Leasing Your Land for Solar Projects?

While every project varies as do the rules and regulations per region, there are some uniform benefits to leasing your land for solar energy regardless of the amount of land or location. Here are a few:

  • Maintain ownership of your land.
  • Long-term lease agreement.
  • No carbon emissions.
  • Creation of local jobs.
  • Financial security.

How Do I Know if My Land Qualifies?

Depending on the developer you try to enter into an agreement with you may be subject to different factors. However, some of the most common factors that may determine if your land is suitable for a solar farm include:

  1. Located near transmission lines and substations.
  2. Geological characteristics are favorable (flat slope, few rocks, and trees, etc.)
  3. Available acreage (generally a minimum of 10 acres)
  4. Accessible for long-term leases (20+ years)

What do you think? Does your land check off these boxes? You may want to spend some time looking into leasing your land for a solar farm. Solar developments can take a lot of time and money, but the good news for you is that the developers will take the lead.

Are you interested in earning money now and helping to generate clean and sustainable energy for your community? Do some research and find out what solar developers are interested in your area. If you want to look for other land investment opportunities, take a look at LandHub’s current land listings here.

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by Geoff Hurdle
Hurdle Land & Realty, Inc.

Buying land is a substantial investment, and many first-time buyers aren’t aware of all their financing choices or may feel intimidated by the process. There are a variety of options when it comes to financing property, but the traditional forms may not always be viable. Have you heard of owner financing? Are you aware of the benefits? Read on to learn why owner financing your land purchase may be your best option!

What is Owner Financing?

Owner financing (also called seller financing, seller terms or bond for title) is just what it sounds like; it’s a form of purchasing that allows the buyer to get financing from the seller rather than a bank. The property owner replaces the bank and payments will be sent directly to the owner, unless the owner chooses to sell your loan, in which case you will send payments to the investor(s) who purchased the loan.

Owner financing land is not uncommon, in fact, many sellers are willing to finance a buyer’s purchase. It’s also quite challenging to secure bank loans for vacant land deals, people looking to move off the grid, or even families interested in diversifying their portfolios. If you’re not seeking a well-established and costly chunk of land (like a ranching operation or serious acreage), then banks likely won’t give you the time of day.

Luckily, owner financing is on the table, and there are some great benefits for you!

The Benefits of Owner Financing Your Land Purchase

  1. Flexibility in Securing a Transaction: Traditionally, lenders have rigid requirements that won’t budge, but with owner financing, both parties can leave the deal happy. Different characteristics like down payments, payment amounts, length of the loan, interest rates, and more are open for discussion.
  2. Quick Closing Process: When you’re in direct communication with the seller for all parts of the purchase you’ll see that the closing process is much quicker, by cutting out all of the middlemen you and the seller can finalize the process on your terms.
  3. Save Money: When you seek lending through an institution there will be fees upon fees and hidden costs that could run into the thousands. When you opt for owner financing you won’t have high bank fees, loan arrangement fees or closing fees to worry about.
  4. Good for Buyers with Marginal Credit: Often times owner financing doesn’t always require a credit check, but some may. Although due to the more open nature of this financing option you may be able to work something out with the seller.

Although different in many ways from traditional loans, owner financing still has some structure. A promissory note will be created by the buyer and seller that details the repayment schedule, interest rate, and the consequences of defaulting on the loan.

This alternative financing method is often viewed as a win-win for all parties involved, and it can ultimately get you onto the land you purchased more quickly. Are you interested in searching for available owner financing properties? Check out the latest on here!

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by Caroline Kirby

Thriving culture, musical hotspots, and the most visited national park (the Great Smoky Mountains National Park) in all of the United States can all be experienced in Tennessee. With growing cities like Memphis and Nashville, investors have been flocking to the Volunteer State in the last few years.

Great investment opportunities, large areas of forest land, rangeland, and 44% of the state’s land dedicated to agriculture all make for big reasons why Tennessee should be at the top of your list when looking to buy land.

So, what makes Tennessee so lovable and livable? Here are our top reasons:

  • Good schools and ranks #26 nationally for education with more than 75 colleges and universities across the state.
  • Thriving job market with one of the lowest unemployment rates in the nation.
  • Comfortably low cost of living and no income tax for residents.
  • Natural beauty with mountains, waterfalls, rivers, and more!
  • Tons of culture—especially when it comes to music! Appalachian bluegrass, country, rock & roll can all be found across TN.
  • Strong network of hospitals and healthcare facilities.

These quick facts are just to get your attention. When it comes to purchasing land in Tennessee there are a lot of great options. Still need some convincing? We’ll break down three more reasons you should consider investing in land in Tennessee.

  1. Retirement Friendly: Are you planning for retirement? Depending on where you live in the U.S. you may be looking to slow things down or change up the routine as you step back from work. Whether you’re looking for a full-time place to live or a vacation getaway Tennessee has a lot to offer. Tennessee attracts many retirees due to its tax-friendliness. Tennessee residents do not pay state income tax, and Social Security retirement benefits are also untaxed. Property taxes are low as well with an average effective rate of just 0.75%.
  2. Home Value on the Rise: Tennessee’s median home values have risen by over 8% since 2017. Although the state’s median home value is still lower than the national average, it’s expected to rise by over 5% this year! Steady appreciation means opportunity for investors who are looking to establish their rental portfolios.
  3. Hunting is Big Business: In Tennessee investors can earn additional income through hunt leases on private land. Tennessee has 4 distinct hunting regions meaning a lot of opportunity for diversity and capital gain. With land for great prices you could buy a few properties and start leasing out during the different hunting seasons.

Like what you’ve read so far? We think Tennessee has a lot to offer whether you’re looking to live there or solely to invest. You can check out all of our current Tennessee listings here, but we’ll help you out by highlighting some of our top listings below.

Land Listings to Look Out for in Tennessee

  • Morton Barn with stables, 30+ acres, and all the amenities.
  • Hunter’s dream of 605 acres with barn, ponds, timber, and mineral rights.
  • Private views of TN mountain range and a convenient drive to Fall Creek Falls state park.
  • 2 Acres of Awesome in Cleveland, TN.
  • Prime Location, private with Smoky Mountain views.
  • Plenty of tillable acreage for crops or food plots for wildlife.
  • Marina, boat launch and country style living offered in gated lakefront community.

Have some land you’re looking to sell in Tennessee?  We recommend taking a look at our membership opportunities so you can sell your land quickly!

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