Are land and buildings obtained by inheritance easy to dispose of?
- September 4, 2023
- Posted by: Aki Kojima
- Category: Inheritance, Gift, Equity Valuation
You may acquire land as assets by inheritance.
Once you pay the estate taxes, you own and can use it.
However, can you end up with only a positive return?
Even if you get the land as an asset, you may still be subject to regrets and stress.
To avoid these disasters, here is a summary of the situations you should know.
Is the land owned as common property?
Be careful that the land is not common property.
Land in common is difficult to sell or dispose of.
It is possible to sell only that portion of the land. There are real estate agents who specialize in the situation.
However, selling all of the land requires the consent of all co-owners.
Also, even if you own 50% of the land, it does not mean you can use 50% of the land; you need the consent of the co-owners.
If you are used to difficult situations in business, you may agree, but it is pretty stressful to decide through discussion. It is also challenging to conclude if you speak from emotion.
Ultimately, a division resulting in common property will likely be contentious later.
Is the land in dispute?
Is the land already in dispute at the time of inheritance?
There are sometimes disputes with the neighbors or relatives.
Even if you acquire such land, resolving the problem that your parents could not solve is difficult.
You may live far away from the property your parents own.
Even if the properties were near your home, you may have busy jobs or raising children and may be unable to spend much time on it.
Disposing of the land in the first place is difficult if there is a dispute.
Family meetings could have you stressed.
Even if the land is formally acquired, disputes among family members may make it difficult to dispose of or sell.
What if you have acquired ancestral land, and even though you have the rights to it, what will you do if your relatives oppose selling it?
Even if you manage to sell the land, there might be a dispute between family or relatives later.
If a land or a house is such that you inherit, these family relationships may be substantial.
When a spouse or other family members find themselves in such a situation, they may not be the principal inheritor, but they should understand and support the inheritors’ feelings.
Such land may also be challenging to sell or dispose of, even if you have rights to it.
Are you willing to pay the fees?
In the disposal of land, a commission is charged.
You can sell land without a real estate agent in Japan, but it is rare.
This is because even if it is just the land, there is a possibility that you will be charged additional fees later if there are problems with the ground.
If you are familiar with this, it is okay. However, if not, you can ask a real estate agent to act as an intermediary for insurance.
The point is whether you can agree to a fee for real estate agents.
People unfamiliar with business may feel the charge is exorbitantly high.
Can you agree with Land prices up and down?
Knowing the old price of land makes it harder to dispose of it.
Even if prices are slowly recovering, they often have not returned to their prices during the bubble era(1986-1991).
When the person who inherited the property was in their 60s or 70s, they may have the prices in mind then.
It can lead to an emotional refusal to sell unless the price is at the old price in the bubble era.
If the sense of rejection prevents you from disposing of the property, you cannot proceed successfully.
Additional Costs with Vacant Homes(Akiya)
Property taxes may increase after 2024 if the house is vacant(Akiya).
What if you are told that your property tax will be USD 3,000 even though you are not using the house?
Although a property tax will not suddenly be certified and go up, property tax could be higher for Akiya.
If the land was vacant, it is difficult to get property tax exemptions in the first place.
How shall we use the property if there is an additional cost to having it?
You may choose to sell or rent the vacant land.
However, there is no doubt that there are now more factors that encourage disposal than ever before.
Land and buildings obtained by inheritance can be challenging to dispose of or sell without careful thought.
Considering property tax after a person has passed away takes time and effort.
You may be unable to dispose of the inherited land or buildings, and even if you do well with the inheritance, it may not be possible to dispose of the land or buildings properly.
We’d like to take these points into deep consideration when considering inheritance.