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5 Ways Holding Onto Vacant Land Is Costing You In Raleigh

Vacant land can be a truly rewarding investment. However, it’s essential to recognize that vacant land is costing you in various ways, both in the short term and in the long run. From annual taxes to property maintenance issues and market conditions, the expenses associated with holding onto vacant land can quickly add up. If you’re concerned about the financial implications of owning vacant land, it’s crucial to understand how these costs can impact your bottom line.

Annual Cost

Purchasing vacant land may seem less expensive than buying a house, but don’t overlook the annual taxes associated with it. Depending on the location and zoning of your land, taxes can range from a few hundred to several thousand dollars per year. If you continue to hold onto your vacant land without utilizing it, you may find yourself paying significantly more in taxes without any tangible return on investment.

Additionally, property owner’s association fees can further contribute to the annual cost of owning vacant land, especially if your land is situated in a community with an association. These fees can vary widely depending on the type of community and the amenities provided. Moreover, there may be additional municipal projects or public utility expansions that could increase your annual tax bill, further adding to the financial burden.

Tax Benefits

While owning vacant land is an investment asset, it offers fewer tax benefits compared to owning residential or commercial properties. Unlike properties with structures, vacant land typically does not qualify for depreciation deductions or homestead exemptions on tax assessments, limiting potential tax savings for property owners.

Cash Flow

Holding onto vacant land typically results in negative cash flow since there’s no structure to rent out for monthly income. However, depending on the zoning of your land, you may be able to generate some income by using it for rental purposes. It’s essential to consider purchasing property owner’s insurance if you choose this option to protect yourself from potential liabilities arising from accidents or injuries on the property.

Property Maintenance

Maintaining vacant land can also incur significant costs. Municipalities may require landowners to maintain their properties by keeping them mowed and free of debris to prevent fire hazards. In some cases, vacant land may attract illegal dumping, resulting in code violations and the need for costly cleanup efforts. Additionally, there may be unforeseen environmental issues or contaminants on the land, which could require expensive remediation.

Market Conditions

The value of vacant land is subject to market fluctuations, and holding onto it during a downturn can be costly. If you purchased the land at a high market value and its value declines over time, you may incur losses greater than the annual taxes you’re paying. Moreover, delaying the sale of vacant land could result in further depreciation, leading to significant financial losses in the long run.

In conclusion, while vacant land can be an appealing investment opportunity, it’s essential to consider the associated costs and potential financial implications carefully. If you’re concerned about the expenses of holding onto vacant land, it may be worthwhile to explore your options for selling or utilizing the property effectively. Contact BHERI CAPITAL at (919)-229-4991 to discuss how vacant land is costing you and explore potential solutions to mitigate these expenses.

No matter what your situation, if you own land in Raleigh, North Carolina, call BHERI CAPITAL at (919)-229-4991 or send us a message to discuss the ways holding onto vacant land is costing you and what you can do about it. 

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