Selling Inherited Land in Florida: Probate, Taxes & Sale Options

I inherited land in Florida, what should I do first?

If you have inherited land, the first goal is to get clear title to the land. Clear title means you are the legal owner of the land and you're free to sell the land. If you need to sell inherited land in Florida, establishing ownership is paramount.

Most times, this means going through the legal process known as probate, although we discuss some exceptions below. Probate involves paying off any debts that remain on the deceased�s estate and then distributing the inherited assets (including the land) to the beneficiaries.

How to avoid Florida probate court when dealing with inherited land

There are some ways to avoid probate in Florida with careful estate planning before the land is inherited. They include transfer of a homestead property, living trusts, joint ownership with rights of survivorship, and lady bird deeds. These methods can simplify the process if you eventually decide to sell inherited land.

Homestead property

In Florida, a homestead can be passed on without probate. A homestead is someone's permanent residence, defined as a Florida property not more than 1/2 acre within a municipality (or 160 acres outside a municipality) and the improvements on it. A homestead is exempt from creditor claims under specific conditions, potentially avoiding probate for that specific property, though not necessarily other land owned by the deceased.

Living trusts

In a living trust, the property owner signs a trust agreement during their lifetime placing assets, potentially including land, into the trust. The trust assets will pass on to the beneficiaries without probate when the time comes for selling inherited land.

Joint ownership with rights of survivorship

In joint ownership with survivorship, two or more people share ownership while they are all alive. Legal title passes to the surviving owner(s) automatically if any joint owner dies. Joint ownership with survivorship is common for spouses and simplifies transferring the inherited land.

Lady bird deeds

A lady bird deed (or enhanced life estate deed) transfers land to future beneficiaries upon the owner's death, but the owner retains the right to live on, sell, or mortgage the property during their lifetime without the beneficiaries' consent. This avoids probate for the specific land covered by the deed.

Probate process - understanding property laws in Florida for inherited land

If probate is necessary for the inherited land, there are two main types of probate in Florida: formal administration and summary administration.

1. Summary administration

Summary administration is faster and cheaper than formal administration. Summary administration can be used for estates totaling less than $75,000 (excluding exempt property like homestead) or when the decedent passed away more than two years ago. Summary administration is completed by submitting a petition to the court to direct the distribution of the deceased�s assets. There is not a personal representative or an executor named. If the court approves the petition, it will issue an order directing the distribution of assets, including the title to the inherited land.

If the decedent died with a will, the estate would be distributed according to the will. If the decedent died without a will (intestate), then the assets will be distributed according to Florida inheritance law.

2. Formal administration

Formal administration is more involved and generally required for larger estates or when summary administration criteria aren't met. Formal administration starts by appointing a personal representative to administer the estate. Initially, the administration of the estate involves gathering the estate's assets, identifying estate creditors, and paying the deceased�s final debts and taxes. When the probate process is complete, the personal representative will transfer the deceased�s assets, such as the inherited land, to the beneficiaries.

If there is a will, the personal representative will submit it to the court to ensure it was constructed properly according to Florida law. If the will is found to be legally valid, then the personal representative can distribute the assets according to the will, clearing the path for selling inherited land.

How long will Florida probate take?

An estate must typically remain open for a minimum of three months to give creditors a chance to make a claim against the estate. A simple probate estate may be resolved in approximately six months, but complex estates can take much longer before you can legally sell inherited land.

Source: Information consistent with The Florida Bar resources.

Prepare the land for selling inherited land

Once you�ve obtained clear title to the inherited land, you�ll want to start thinking about preparing the land for sale. Unless you plan to sell inherited land to a cash buyer "as-is", you�ll probably want to do some maintenance. The maintenance will help to show your land in the best possible light to prospective buyers. This could be anything from mowing or bush hogging, mending fences or a gate, clearing debris, or taking down a run-down structure.

Once the land is cleaned up, you�ll want to take photographs. Unless you�re selling to a neighbor or family member, you�ll need high-quality photos to get buyers interested when you sell land in Florida. Normally, it�s worth having a professional real estate photographer do this. They have specialized equipment to capture aerial drone imagery to showcase your land.

Inheritance tax and capital gains tax when selling inherited land in Florida

Landowners often wonder how inherited land is taxed. Fortunately, there is no state inheritance tax in Florida. There is a federal estate tax, but this is only triggered for very large estates, typically worth several million dollars.

But you may have to pay capital gains tax when selling inherited land. A capital gain is when you sell an asset (like land) for more than its tax basis. When you inherit land, the land's tax basis usually "steps up" to its fair market value at the time of the owner's death. That means that if you sell the inherited land right away at its market value, you would likely owe little or no capital gains tax.

If you wait to sell the inherited land, you may have to pay more taxes. If time passes and the value of the land increases after inheritance, you may have a taxable gain. Short-term capital gains tax rates (typically higher, taxed as ordinary income) will apply if you sell the land with a gain less than a year after inheriting. Long-term capital gains rates will apply if you hold the inherited land for a year or more before selling. The taxable amount would be the difference between the land's value at inheritance (your stepped-up basis) and the sale price. The tax rate on long-term capital gains is 0%, 15%, or 20%, depending on your overall taxable income and filing status.

Options to sell inherited land as-is

Once you�ve decided to sell inherited land, there are three main options for selling your Florida land:

• List with a Real Estate Agent: This is the traditional way to sell land in Florida. The agent will market the land, handle showings, find potential buyers, and assist with most of the paperwork.
  • Pro: Aims to get the best possible market price.
  • Con: Selling vacant land can take a long time (months or years) with no guarantee of a sale; you may need to invest in cleanup/preparation; agent commissions apply.
• Sell For Sale By Owner (FSBO): You take on all responsibilities: marketing, pricing, finding buyers, handling negotiations, and managing contracts. Understanding how to sell my land in Florida effectively takes significant effort.
  • Pro: Save on real estate agent commissions.
  • Con: Requires significant time, effort, and market knowledge; can be complicated with inherited land, especially if multiple heirs are involved.
• Sell Directly to a Cash Land Buyer: This involves selling your inherited land directly to an individual or company that buys land for cash, often quickly.
  • Pro: Usually the fastest method (process can take just weeks); typically sell the land 'as-is' avoiding cleanup or repairs; simpler process, avoids commissions and often closing costs. Good option if you want to sell my inherited land in Florida quickly.
  • Con: The offer price will likely be lower than the full retail market value (a discount for the speed and convenience).

Choosing the right option depends on your priorities � whether maximizing price or achieving a quick, hassle-free sale is more important when dealing with your inherited land.

Please consult your financial advisor, accountant, real estate attorney, or tax specialist for advice specific to your situation. This article is for informational purposes only and does not constitute tax or legal advice regarding selling inherited land.