I found a house that I really like. It's relatively cheap with 3,4 acres of land. The reason why is cheaper is probably because it has high property tax. I was wondering if it's possible to give away or sell 2 acres to the city in hopes of getting a lower property tax? I don't need 3 acres of land. 1 acre would be enough for me. Is something like this possible?

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I will not need the part in red. This is in Ohio, USA.

  • It looks like the new "parcel" would be land-locked. That is, it wouldn't have direct access to a road which significantly reduces its value. You would have to include a corridor to a road or agree to an easement across your land.
    – mkennedy
    Jul 10 '20 at 19:18

In general you have several options. They all might not work in your specific case but there are options, and there are also regulations you have to consider.

  1. Give the excess land to the local government. They have to want it of course. It helps if you are adding the land onto an already existing property that the local government owns. This gift would be tax deductible, and would lower you annual property taxes.

  2. Give the land to a local charity. They have to want it of course. It helps if you are adding the land onto an already existing property that the charity owns. This gift would be tax deductible, and would lower you annual property taxes.

  3. Sell part of the property to your neighbor. You will get some money back. You may have to pay taxes on the sale. Your annual property tax bill will be lower.

  4. Give up your development rights to the excess property. In some places land that big can be subdivided. In some places giving up that right future development of the land will lower the value of the land. That can save money in the long run. It is also possible to get a tax deduction when the rights are surrendered. The local government will have information about this process.

Things that you have to consider:

  1. You need an estimate hove how much the land will be worth of the excess is removed. It might not save much money if the bulk of the value is in the structures. The most recent tax assessment or tax bill should specify the tax value of the land and the tax value of the structures.

  2. There is a risk that removing the land can have an unintended consequence if your property ends up being extra small compared to similar properties in the region. That might make it harder to sell. It might also lower the property tax lower than you estimated.

  3. Subdividing the land might not be possible. Some places have zoning laws that specify the minimum lot size. In parts of the county they want to keep rural it is not unusual to see minimum sizes of 1,3,5 or even 10 acres.

  • This property is in suburbs and to have land of this size is unusual. The price of the property went down $20k the same day it was listed. Probably a sell trick to get a buyer to think they are getting a discount.
    – Grasper
    Jul 10 '20 at 17:10

Things may be different in Ohio, but Property Tax is generally levied on the market value of the entire property (including structures). I suspect that most of the value of the property is in the house, so even if you could give that section away I don't think it will change the overall value much.

That said, why would the city take that land from you? Is there some value to the city that makes it worth their effort? There's no standard procedure for giving land back to the government, so it would have to be a willing transaction. It seems like it's locked in by your property and other wooded areas. The only thing that gives me hope from the picture is the nearby baseball fields.

Instead of giving it away, I would talk to the owners of adjacent lots and see if that land has value to them that would make it worthwhile to buy it from you cheaply.

  • If getting rid of the part of land won't decrease the property tax there isn't point to give it away.
    – Grasper
    Jul 10 '20 at 16:57

Sell, perhaps. Or see if the current owner is interested in subdividing the lot before you buy, so you only get what you want.

Give away (to the city or anyone else), doesn't make sense. It's like giving away the money in your savings account because you're afraid of paying taxes on the interest. Property taxes are generally set so that people can still make a net positive return from (imputed) rent and/or appreciation -- else not many people would want to own real estate.

You say the land "probably" has high taxes. Before you let the tax tail wag the financial dog, make sure you know whether it's even a significant issue. If the property tax is proportional to market value, then saying the property is cheap "because" its taxes are high makes no sense.

  • The property tax for the property went up $2k since the house was purchased in 2008. Now the property is for $260k with $7k in property taxes. Normally property of this cost have property tax around $4k. This is why I think it's all about the land.
    – Grasper
    Jul 10 '20 at 16:50

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