How to Sell Land Out of State - Guide to Selling Long-Distance
If you've moved away, inherited a property, or no longer visit your out of state property you may be wondering if you'll be able sell it long distance. The answer is yes - it may take some extra planning, but it's possible to sell land out of state.
You have a few options to choose from including selling the land by owner, finding a real estate agent, or selling to a cash buyer.
You may also be wondering if you'll need to pay taxes when you sell out-of-state real estate. We'll cover all these topics below so you can make the best decision about selling your vacant land.
Who needs to sell property in another state?
There can be a number of reasons people need to sell land out of state. Maybe you've inherited the property from a family member, but no longer live in the area yourself. If you live far away and the property doesn't have sentimental value to you, selling the land may simplify your life.
In other cases, you may be helping a relative or friend who needs to sell their real estate due to illness, divorce or other family issues. If a loved one turns to you in this situation, you want to help them sell the property for a reasonable price without a complicated process.
Another reason people may need to sell vacant land out-of- state is because they've moved or are moving soon. You didn't get around to selling your land before moving, but you don't want to keep paying property taxes on a long distance property.
No longer use recreational property
Options for selling out of state property
For the most part, you have all the same options to sell land out of state as you would locally. What's more difficult is that you may not know people nearby who can help you sell the property. For example, you may need a realtor, a handyman to clean up the property, or a photographer to take listing photos. Finding those people is a little bit harder from another state.
Sell with a real estate agent
You can search for qualified real estate agents on websites like Zillow and Realtor.com. You want to find a realtor that specifically has local experience selling LAND. Not every real estate broker will take land listings. Also, many of them do not have the right experience to get your land sold. When you look at an agent's listings, are most of them land sales? Do their listings have many professional photos that show the land's full potential? Does the listing description include lots of relevant details,? Or does it just say '2 wooded acres for sale?' These are all factors to consider when selecting your land selling agent.
Sell for sale by owner
Another option you have is to roll up your sleeves and sell the land by owner. This can be quite difficult long distance, but could work if your real estate is in a highly-desirable area.
You'll have to find local service providers to help create your initial listing. For example, you may need a landscaping company to clean up the property. You'll also need a company that can make a For Sale sign with your phone number and take it to your property. Lastly, you'll need to find a photographer to take pictures of the land so you can create an online listing.
You'll want to post your real estate for sale on several websites to gain wide exposure. To learn more, see How to Sell Land Online.
Do I need a real estate attorney to sell land?
No, you don't need a real estate attorney to sell property in another state, but you may find it helpful for certain steps. It's possible to draft your own sale contract without an attorney. We recommend using template contract forms from the local real estate commission.
You may want to hire an attorney to help you with the closing. An attorney can draft the deed for you. The deed is the legal document that transfers ownership. Some attorneys also provide escrow services. They will transfer the purchase funds from the buyer to the seller when the deed is signed.
Online land buyers
The alternative to listing your real estate with a realtor or selling it yourself is to sell to a cash buyer. This can save you quite a few steps. You won't need to search for and interview realtors or create your own marketing to sell land by owner. The disadvantage is you'd be selling the property at a discount.
Still, for some people the convenience of selling hassle-free is more important than getting the full market price. It's also the fastest way to sell land - the whole process typically takes less than two weeks to sell land. If you like the idea of selling your out of state land quickly, consider requesting a cash offer today.
Capital gains tax on property sold
There are two kinds of taxes to take into account when for property sold out of state:
Capital gains tax is due on any profit made after a property owned for at least 1 year is sold. In 2022, the tax rate on capital gains is 0%, 15%, or 20% depending on your tax bracket and filing status.
For the 2022 tax year, individuals don't have to pay capital gains tax if their total taxable income is $41,675 or less. The rate increases to 15 percent on capital gains for income between $41,676 to $459,750. For people with income above that level the rate rises to 20 percent.
There can be exceptions for inherited properties. The cost basis for an inherited property is the market value of the land at the time of inheritance. So if the property's sold quickly after inheritance, there may not be a capital gain. That's one way the heirs can cut or eliminate capital gains tax.
State and local taxes
When selling land out of state, you may owe taxes to the state where the property is located, as well as the state where you live. Typically, when you file your tax return in your home state, you will receive a tax credit from the other state. For example, if you live in Florida and sell an out of state property located in Texas, you may owe taxes to both states.
How do I report the sale of vacant land?
Internal Revenue Service Publication 544 explains the tax rules for selling property including how to calculate a gain or loss. You need to report the sale of land as a capital gain or loss. To do so, use IRS Form 8949 to calculate the amount of gain or loss from the sale. Then transfer the results to Schedule D and Schedule I, which are addendums to IRS Form 1040.
Please consult your financial advisor, accountant, lawyer, or tax specialist. This article is for informational purposes, and is not tax or legal advice.