Selling Inherited Land in Tennessee

Inherited Land in Tennessee: What to Know

In Tennessee, inherited land passes to the heirs or the people named in the will at the moment of death. That helps. But a buyer still needs proof of who those owners are, and every owner has to sign the deed.

This page covers Tennessee's intestacy order, where probate fits for land, what the state's heirs property law does when relatives disagree, and the tax side of a sale. This page is general information, not legal or tax advice.

How land passes with a will and without one

Under Tenn. Code 31-2-103, real property vests right away in the heirs when there is no will, and in the people named in the will when there is one. The exception is a will that tells the personal representative to administer the land as part of the estate.

Without a will, Tenn. Code 31-2-104 sets the shares. A surviving spouse takes everything if there are no descendants. If there are descendants, the spouse takes one third or a child's share, whichever is larger. The rest passes in this order:

• Children, and grandchildren in place of a child who died first
• Parents
• Brothers and sisters and their descendants
• Grandparents and their descendants

Probate and small estate options for real estate

Tennessee's small estate process is for personal property only. Tenn. Code 30-4-102 defines a small estate as probate property worth $50,000 or less, and property in that law means personal property. Land does not go through the small estate affidavit.

Because land vests in the heirs at death, a full probate case is not always needed just to hold the land. Probate still matters. If the personal property is not enough to pay the debts, section 31-2-103 lets the personal representative reach the real property. A will also has to be probated before a buyer can rely on it.

Buyers and title companies need proof of who the heirs are. Depending on the facts, that may be a probate court order, a probated will, or recorded heirship documents. Ask the clerk of the probate court in the county, or a Tennessee attorney, which records your county and title company accept.

• Small estate affidavit: personal property of $50,000 or less; not land
• Land without a will: vests in the heirs at death
• Land with a will: vests in those named, once the will is probated
• Debts: the personal representative can reach land if other assets fall short

Heirs property and when the heirs disagree

When several heirs inherit, they usually own the land together as tenants in common. Each one can sell their own share, but a buyer of the whole parcel needs every owner's signature.

Any co-owner can ask a court for partition, or a sale for partition, under Tenn. Code 29-27-101. Tennessee also adopted the Uniform Partition of Heirs Property Act as Public Chapter 1109 of 2022, now Tenn. Code 29-27-301 to 29-27-313. It applies to partition cases filed on or after July 1, 2022.

Under that law the court first decides if the land is heirs property. If it is, the court sets a fair market value, gives the owners who did not ask for a sale a chance to buy the others out, and looks at dividing the land before ordering a sale. A court-ordered sale is normally on the open market. The bill text lists each step.

Taxes when you sell inherited land

You do not pay federal income tax just because you inherit land. Tax comes up when you sell. Under IRS Publication 551, your starting value, called basis, is generally the land's fair market value on the date of death. The estate's personal representative can choose a later alternate valuation date in some cases.

This is often called a stepped-up basis. Say the land was worth $25,000 when your parent died and you sell it for $26,000. Your gain is about $1,000 before selling costs, not the full price. IRS Publication 559 says a gain on inherited property counts as long term no matter how long you held it, so the lower long-term rates apply.

Tennessee does not tax the gain. Its only individual income tax, the Hall tax on interest and dividends, was repealed for tax years starting in 2021. The state inheritance tax also ended for deaths after 2015.

A written appraisal or a broker opinion of value from around the date of death helps you prove your basis. Talk with a tax professional about your own numbers. This page is general information, not legal or tax advice.

• Basis: usually the land's value on the date of death
• Gain: sale price minus that basis and your selling costs
• Holding period: always long term for inherited property
• Report the sale on your federal return; the closing agent may issue Form 1099-S

Selling before or after probate

Since land vests in the heirs at death, the heirs can often sign a deed together without waiting for a long probate. The practical hurdle is proof. The buyer's title company has to see who the heirs are, that all of them signed, and that estate debts will not reach the land.

If a will exists, probate it first. If an heir is missing, a minor, or will not sign, the sale usually needs a court step such as partition. If there are back taxes or liens, they are paid at closing from the sale money.

How we buy land from heirs in Tennessee

EasyLotBuyer buys vacant land for cash, including land owned by heirs and estates. We make a cash offer within 24 hours. You pay no fees or commissions, and we pay the closing costs. We can close in as few as 7 days once the people who can sign are in place.

We also buy land with back taxes, liens, title issues or no road access. Back taxes are paid at closing from the sale. See our Tennessee land page or our guide on how to sell inherited land.