Vacant land can be a worthy investment, but it can also have hidden costs that you are not always aware of. Some costs may occur right away while others may occur over time. Costs to consider include annual taxes, potentially home owner association fees, fewer tax benefits, cash flow, property maintenance, and market conditions. Call Turbo Land Offers at (844) 558-6880 to discuss the hidden costs of owning vacant land.
Buying vacant land is typically less expensive than buying a house or other structure, but don’t forget there are annual taxes! Depending on the location and zoning of your land, the taxes might be a few hundred dollars or a few thousand dollars. If you own your vacant land for an extended period 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 except the same piece of vacant land you started with.
Another potential fee is the home owner’s association annual fees. If you purchased land in a developed community with a property owners association, these fees might also be a few hundred or a few thousand dollars a year, depending on the type of community, the services they provide, and the amenities available to you. Also, be aware a public utility might expand or there might be a special municipal project that could be added to your annual tax bill that may or may not benefit your land directly.
Owning vacant land is a worthwhile investment, but owning a single-family home or a commercial property has more tax benefits. With land, you are not able to claim depreciation on your taxes, and vacant land does not normally qualify for any type of homestead exemption when it comes to your tax assessment.
Negaive cash flow is another hidden cost of owning vacant land. You are not able to collect rent or other monthly payments without a structure that people want to utilize. Depending on the zoning of your vacant land, you might be able to get back some of your annual tax fees by utilizing your vacant lot as an extra rental space. If you do anything like this, you should consider purchasing property owner’s insurance to protect yourself. If something were to happen to someone while moving or occupying your vacant land, they might decide to file a lawsuit against you. Needless to say, that would be a huge cost for you.
Property maintenance for vacant land can also become costly. If your property is located within a town or municipality, they may require mowing to keep your property looking good. If your property has a lot of trees, they may require you to keep up with brush clean up to guard against fires. If your vacant land is in a less desirable area, people may try to dump on the property, turning it into a mini landfill! Accumulating trash and garbage might cause you to violate local codes and can be costly to have the trash removed. The garbage may also introduce unknown contaminants or toxic issues on this land that you are unaware of, but once discovered, this problem might also be expensive to clean up.
If you hold onto vacant land in Tennessee for too long that can be a big mistake. If you purchase your property during a hot market when the value is high and own it for a long time, the value might decrease more than you expect. Depending on how much you paid for your land, it might cost even more than your annual taxes by holding onto it year after year. You could also be losing hundreds or even thousands of dollars in market value.