Selling Inherited Land in Tennessee

First: Find Out Who Owns It Now

You cannot sell land until the public record shows who has the right to sell it. With inherited property, that is often less clear than families assume.

• If there was a will, the land generally goes to the people named in it. The will normally has to be filed with the probate court in the county where the owner lived so that the record shows the transfer.
• If there was no will, Tennessee law decides who the heirs are, typically the surviving spouse and children. The title company will ask for documentation that identifies every heir.
• If the land was held in a trust, or jointly with a right of survivorship, it may pass outside probate altogether.
• If the last recorded owner died years ago and nothing was ever filed, the list of owners may now include people who have never seen the property. This is common with family land and it can be fixed, but it takes time.

A probate attorney can sort this out. So can a title company, which will search the record and tell you exactly what is missing. It is worth asking for that search early, before the property goes on the market, so a buyer does not find the problem for you.

When Several People Inherit Together

When a parent leaves a farm to three children, each child owns a share of the whole property. Nobody owns a particular field. Selling the whole tract requires every owner's signature.

Most families reach an agreement once everyone has the same facts in front of them. It helps to get three things on the table early:

• An independent value. A broker's valuation or an appraisal gives everyone the same starting number.
• The carrying costs. Property tax, insurance, mowing and upkeep continue whether or not anyone uses the land.
• The options. Sell the whole tract, have one heir buy out the others, or divide the land so that some keep their part and some sell.

If the owners cannot agree, any one of them can ask a court to divide the property or order it sold. This is called a partition action. Tennessee adopted the Uniform Partition of Heirs Property Act in 2022, which sets out the steps a court follows with inherited family land. A partition suit is slow and expensive and usually leaves everyone with less money, so it is a last resort. Ask an attorney about it before it gets that far.

What You Will Owe in Tax

Tax is the biggest worry for most families, and it is usually smaller than they fear.

• Your basis is generally reset. When you sell property, you pay tax on the difference between the sale price and your "basis." For inherited property, federal law generally sets the basis at the fair market value on the date of death, not at what your parents or grandparents paid. If the farm was worth $900,000 when your mother died and you sell it a year later for $950,000, the taxable gain is about $50,000, less your selling costs.
• Tennessee has no inheritance tax for deaths in 2016 or later, and it does not tax an individual's capital gains.
• Federal estate tax applies only to very large estates. Your attorney can tell you whether it applies.

Land that was given to you while the owner was still alive is treated differently: you generally take over the giver's original basis. Our guide to taxes when you sell a farm in Tennessee explains the difference.

Check the Greenbelt Status

Many family farms are enrolled in Tennessee's Greenbelt program, which lowers the property tax on farm and forest land. The enrollment belongs to the owner, not the land. After a death, the new owners generally need to file their own application with the county assessor by March 15 to keep it.

If the status lapses, or if the land is sold to someone who will not keep farming it, the county can bill rollback taxes, which recapture the tax savings from recent years. Find out where the property stands before you set a price. Our article on how Greenbelt works in Tennessee has the details.

What to Gather Before You Sell

Families often live hours away from the land they inherit and know little about it. These are the things a buyer will ask for:

• The deed, and any survey or plat.
• The most recent property tax bill.
• Any lease, written or verbal, with someone who farms, cuts hay, hunts or rents a house on the property.
• Any easements, such as a shared driveway, a power line or a neighbor's right to cross.
• Soil or septic records, and well records if there is a house.
• Records of any timber sales.
• The names of the neighbors. They often know the property best, and one of them may want to buy it.

If you do not have these, we can help track most of them down from the county records.

Sell, Keep or Divide

Selling the whole property is not the only choice. Depending on the land and the local rules, a family can sometimes sell part and keep the homeplace, sell the road frontage and keep the back acreage, or lease the land for farming or hunting while deciding. We will lay out what each option is likely to bring so the family can compare them.

Be Careful With Letters Offering Cash

Death and probate filings are public records, and companies that buy land watch them. Heirs often receive letters, calls and texts within weeks, offering a fast cash purchase. Some of those offers are fair and many are far below market value. Get an independent valuation before you respond. Our guide to selling to a cash buyer or through a broker explains what to look for in the contract.

How We Help Families

Much of our work is with families selling land they did not expect to own. We give every heir the same written valuation, deal with the farmer or the tenant, coordinate with your attorney and accountant, and keep each owner informed so that no one is surprised. To begin, request a free valuation or call Ross at 615.516.6055.

Common Questions

Do we have to go through probate before we can sell inherited land in Tennessee?

It depends on how the land was owned and whether there was a will. In Tennessee, real estate generally passes to the heirs or to the people named in the will at the moment of death. Even so, a buyer's title company will want the public record to show who those people are, which usually means a probated will or sworn documentation of the heirs. A probate attorney or the title company can tell you what your situation needs, and it is worth asking before you list.

Do all the heirs have to agree to sell?

To sell the whole property in an ordinary sale, yes. Every owner has to sign the deed. If one owner refuses, the others can sell only their own shares, which few buyers want, or ask a court to divide or sell the property.

Will we owe capital gains tax when we sell?

Often much less than families expect. Under federal law, inherited property generally takes a new tax basis equal to its fair market value on the date of death. Tax is owed only on the increase in value after that date. Tennessee does not tax an individual's capital gains. Ask your accountant to confirm the numbers for your family.

Is there a Tennessee inheritance tax?

No. Tennessee's inheritance tax was repealed for deaths in 2016 and later. The federal estate tax still exists but applies only to very large estates.

What happens to the Greenbelt status when land is inherited?

Greenbelt enrollment belongs to the owner. When ownership changes, the new owners generally have to file their own application with the county assessor, and the filing deadline is March 15. If nobody files, the land can lose its status and rollback taxes can come due. Call the assessor's office soon after the death to ask what they need.

Should we sell the land as it is or clean it up first?

It depends on the property. Clearing junk, mowing so the land can be walked and photographed, and marking the corners are almost always worth doing. Larger projects such as removing old buildings or dividing the tract should be decided after we look at who the likely buyer is.