If you inherited land or received it by bequest from a deceased family member, you will likely consider selling it if it is difficult to put to use. Rural land that continues to incur fixed asset tax becomes a growing burden the longer you keep ownership because maintenance costs continue to accumulate. In this article, we explain four ways to let go of unwanted rural land, the details of the "Act for Returning Inherited Land to the National Treasury" that came into effect in April 2023, and practical tips for achieving a successful sale.
What are the ways to dispose of unwanted rural land?
There are four main ways to let go of rural land. Review the conditions and key considerations for each option, then choose the one that best fits your situation.
Decline to take it over through inheritance renunciation
Inheritance renunciation means not inheriting any of the deceased person's assets or liabilities. This allows you to give up the land before ownership passes to you, but you cannot "renounce only the land and still inherit the cash". In addition, the procedure for inheritance renunciation must be completed within three months after you learn of the deceased person's death.
Sell it
Even if the land is unnecessary to you, it may still be attractive to someone else. Consulting a real estate company and asking it to handle the sale is the most orthodox way to dispose of it. However, rural land tends to be less marketable, so it is important to plan on the assumption that the sale may take time.
Donate it to a local government or municipality
If the deadline for inheritance renunciation has passed, or if no buyer can be found even after listing the land for sale, donating it to a municipality is another option. There is no monetary compensation, but the advantage is that the burden of fixed asset tax and city planning tax can be eliminated.
Transfer it to an individual or corporation
There may be someone who needs the land for purposes such as parking, storage, or a garden. You may be able to find a transferee by putting up a sign or approaching neighbors or companies directly. However, a transfer may involve gift tax, stamp tax, and registration and license tax, so it is necessary to agree in advance on how those costs will be handled.
What is the Act for Returning Inherited Land to the National Treasury?
The Act for Returning Inherited Land to the National Treasury is a system that allows ownership of land acquired through inheritance or bequest to be transferred to the state. It was promulgated in April 2021 and came into effect on April 27, 2023.
Benefits
- You can relinquish ownership of the land, eliminating the obligation to pay fixed asset tax and maintenance costs
- The state handles the registration procedures, so you do not need to do them yourself
Drawbacks and application requirements
- The land must be vacant, with no buildings, trees, mortgages, or similar encumbrances present (if the conditions are not met, the application will be rejected)
- If the land is jointly owned, all co-owners must apply together
- You must pay a fee equivalent to 10 years of land management costs
- Land acquired by gift or purchase is generally not eligible (inheritance and bequest only)
After understanding the contract structures used with real estate companies, it can also be useful to consult a professional about which method best suits your circumstances.
What tips help make a rural land sale successful?
Selling rural land is challenging, but your chances of success improve when you keep the following three points in mind.
Choose a real estate company with strength in rural land sales
Real estate companies vary in the types of properties they handle best. By choosing a company with experience in rural land sales, you can expect sound advice and access to local networks that help identify buyers. Obtain estimates from multiple companies and compare them carefully.
Do not become overly attached to the price
Rural land tends to have lower asset value and limited demand. Even ordinary land may take three to six months to sell, while rural land often takes even longer. Before it gains the reputation of being "land that will not sell", considering an appropriate price reduction can be a practical strategy.
Reduce selling costs as much as possible
With rural land, where sale prices often tend to be low, controlling costs such as brokerage fees and taxes is key to preserving profit. If an old house remains on the property, demolition costs are often borne by the owner, so there are cases where handing the property over as-is without demolition leaves a better net result.
Related reading
- What is an exclusive brokerage agreement? Benefits, drawbacks, enclosure risks, and how to choose a real estate company
- Why won't a used condominium sell? A thorough explanation of solutions and pricing strategies for a successful sale
- Seven real estate investment failure cases: common pitfalls for beginners and how to avoid them
Frequently Asked Questions (FAQ)
Q. What should I do if I do not want to inherit rural land?
Inheritance renunciation is the most reliable approach, but the procedure must be completed within three months after learning of the deceased person's death. If that deadline has already passed, consider selling, donating, or using the Act for Returning Inherited Land to the National Treasury.
Q. Can the Act for Returning Inherited Land to the National Treasury be used for any land?
No. The land must be vacant, with no buildings or trees, and it must also be free of mortgages or similar rights. In addition, only land acquired through inheritance or bequest is eligible.
Q. How long does it take to sell rural land?
Ordinary land typically takes three to six months to sell, while rural land often takes longer. In areas with limited demand, it may be necessary to expect a timeline of more than a year.
Q. Should rural land with an old house be demolished before it is sold?
Not necessarily. In some cases, demolition costs may exceed the sale proceeds, so listing the property with the old house still in place and adjusting the price can leave you with a better net outcome.
Q. What is the fastest way to eliminate the burden of fixed asset tax?
Applying under the Act for Returning Inherited Land to the National Treasury, or proceeding with a sale or donation, is the fastest approach. It is also possible to list the land for sale while moving forward with the treasury return application in parallel.
