How do I get rid of worthless real estate?

15 Replies

A few years ago I purchased a vacant residential lot in my personal name. I won’t post too many details, because I don’t want to obscure the true issue at hand. All I’ll say is that the property is worthless. Completely worthless. A potentially large liability, even.

I was thinking I’d just stop paying the taxes on the property and let it go to tax sale, but I want to be smart about it and make sure it’s as beneficial to me as possible — legally, as well as financially.

I was thinking I'd Quit Claim it to an LLC that I would create for this sole purpose and then stop paying the taxes. I figure this would keep the tax sale foreclosure and any liens out of my name and off of my credit reports. My only hesitation is that I'm afraid it may be considered a fraudulent conveyance. I'm also unsure whether or not I'd be able to write it off as a capital loss.

Would this be my best bet, or is there another option I’m missing?

Your best bet is to seek out the advice of both an attorney and a tax professional in your area. Have you considered trying to sell it? I am sure an owner finance deal with a down payment albeit small, would attract people and it may make sense to someone you would never expect. Reach out to your local wholesalers and agents for help. Or let me know if I could be of any help.

Another option to consider depending on where the property is located you might be able to donate it to the city to turn into a small park, or a charity, or an urban farming organization.  I hear ads on the radio from time to time of certain charities accepting real estate donations, that would likely give you a tax deduction but make sure you check with a tax professional or attorney for tax matters though.

Originally posted by @Aaron K. :

Another option to consider depending on where the property is located you might be able to donate it to the city to turn into a small park, or a charity, or an urban farming organization.  I hear ads on the radio from time to time of certain charities accepting real estate donations, that would likely give you a tax deduction but make sure you check with a tax professional or attorney for tax matters though.

Believe me when I say that I have exhausted every possible way of getting rid of the property or putting it to some form of use.

Give it to a local church. They are exempt from property taxes so no liability there. If there are other liabilities with the property I'd be interested in hearing them.

don't worry about it affecting your credit.. as long as you don't have city liens for utls that is.

you can just let it go and let someone else buy it.. I have let many a dog go to tax's and many times I wake up to find that someone somewhere bought it and I put in a claim for the overages.. got a check a few years ago for 8,800... and I think its tax free since I did not sell the property.. can't really remember.

church is another way to go .. if they will take it.

VERY long story short....

The lot was the site of an iron ore test mine 100 or so years ago. Mining operation were abandoned and the Township used the 65’ pit as the town dump for a few years until neighboring communities complained about the odor. The Township then filled everything in with uncontrolled, uncompacted fill. Years later, in the 1960s, an entire community of houseswere built on and around the site. Guess which lot is the only one affected in the entire neighborhood 😕

Due diligence was done before the purchase, but the Township intentionally deceived me. I’ve spoken to attorneys that say I don’t have a case because the Township will outspend me with taxpayer money.

I’ve already had charities deny the donation. 

Anyone want it? It’s yours for a dollar. I’ll even Seller-finance😜

Originally posted by @Jay Hinrichs :

don't worry about it affecting your credit.. as long as you don't have city liens for utls that is.

you can just let it go and let someone else buy it.. I have let many a dog go to tax's and many times I wake up to find that someone somewhere bought it and I put in a claim for the overages.. got a check a few years ago for 8,800... and I think its tax free since I did not sell the property.. can't really remember.

church is another way to go .. if they will take it.

This has been the big question for me, Jay. I'm afraid of the liability, as well as any potential derogatory personal reporting. I just transferred the lot into a new LLC (for an extra degree of separation) and the plan is to let it go to tax sale. Any pitfalls with doing so?

There is no derog reporting on unpaid property tax's  if there were every builder developer myself included would have terrible credit..

Yup they were in my families name.. but do check with local authorities my experiences are CA.. And I know the laws are different in every state..