Inherited Land in Massachusetts: What Should You Do Next?

Losing a loved one is never easy. The last thing most families want to think about is paperwork, taxes, and real estate. Yet for many Massachusetts families, inheriting land or property becomes one of the first major decisions they have to make after a loss.

At Velney Development, we regularly work with families throughout Massachusetts who inherit vacant land, development sites, older homes, and investment properties. One of the biggest misconceptions we hear is:

“I inherited land… now what?”

The answer depends on your family’s goals, the property’s condition, its zoning, tax implications, and whether keeping or selling the property makes the most financial sense.

This guide explains what you need to know about inherited land in Massachusetts, including current Massachusetts tax laws, probate considerations, and the different options available to heirs.

Important Disclaimer: This article is for educational purposes only and should not be considered legal or tax advice. Estate planning, probate, and tax laws can change. Always consult a Massachusetts probate attorney, CPA, or tax professional regarding your specific situation.

Table of Contents

• What Is Inherited Property?
• What Happens After Someone Passes Away?
• Does Massachusetts Have an Inheritance Tax?
• Massachusetts Estate Tax Explained
• Property Taxes on Inherited Land
• Capital Gains Tax and the Step-Up in Basis
• Should You Keep, Develop, Lease, or Sell?
• Selling Inherited Land in Massachusetts
• Tips for Families Inheriting Property Together
• Why Local Development Knowledge Matters
• Frequently Asked Questions

What Is Inherited Property?

Inherited property is any real estate that passes from someone who has died to their beneficiaries or heirs.

This may include:

• Vacant land
• Single-family homes
• Multi-family properties
• Farms
• Commercial buildings
• Development land
• Investment property

Sometimes ownership transfers through a will.

Other times, Massachusetts intestate succession laws determine who inherits when there is no will.

Just because you’re named as an heir does not automatically mean the property is immediately yours. The estate typically must go through probate or another legal transfer process before ownership can be finalized.

What Happens After Someone Passes Away?

Every estate is unique, but the process generally includes:

• Identifying heirs
• Determining whether probate is required
• Paying outstanding debts
• Paying applicable taxes
• Clearing liens
• Transferring title
• Recording the new deed

If multiple siblings inherit the property together, everyone usually owns an undivided interest unless another legal arrangement is made.

This often creates one important question:

What does everyone want to do?

Sometimes everyone agrees.

Sometimes they don’t.

That is where good communication—and good professional advice—becomes invaluable.

Does Massachusetts Have an Inheritance Tax?

This is one of the biggest questions we receive.

The answer is no.

Massachusetts does NOT have an inheritance tax. Beneficiaries generally do not pay a tax simply because they inherited property.

However, that does not mean there are no taxes involved.

There may still be:

• Massachusetts estate tax
• Federal estate tax (for very large estates)
• Property taxes
• Capital gains taxes when the property is eventually sold
• Income taxes if the property produces rental or farm income

Understanding the difference between these taxes is extremely important.

Massachusetts Estate Tax Explained

Although Massachusetts does not impose an inheritance tax, it does have an estate tax.

As of current Massachusetts law:

• Estates exceeding $2 million may be required to file a Massachusetts estate tax return.
• Estates at or below the threshold generally owe no Massachusetts estate tax.
• The tax is paid by the estate—not directly by the beneficiary.

Most families will work with an estate attorney and CPA to determine whether an estate tax return is required.

For extremely large estates, federal estate tax rules may also apply, although the federal exemption is substantially higher than the Massachusetts threshold.

Don’t Forget About Property Taxes

One tax that never disappears is the local property tax.

Every Massachusetts city and town continues assessing property taxes regardless of whether the owner has passed away.

If property taxes become delinquent:

• Interest may accrue
• Municipal liens can develop
• Additional legal issues may arise

Before selling inherited land, one of the first things professionals typically verify is whether all municipal taxes have been paid.

Capital Gains Tax and the Step-Up in Basis

One of the most valuable tax concepts involving inherited real estate is the step-up in basis.

Here’s a simple example.

Imagine your parents purchased land in Massachusetts decades ago for:

$80,000

At the time of their passing, the property’s fair market value has increased to:

$500,000

Under current federal tax law, your tax basis is generally “stepped up” to the property’s fair market value as of the date of death (or another applicable valuation date used by the estate).

If the property is then sold shortly afterward for approximately that same value, there may be little or no taxable capital gain because the sale price is close to the stepped-up basis.

If you keep the property for several years and it appreciates further before selling, capital gains tax may apply only to the appreciation occurring after the inherited basis was established.

Every situation is different, which is why working with a CPA is essential before listing inherited property.

Should You Keep, Develop, Lease, or Sell?

There is no one-size-fits-all answer.

Here are four common options.

Option 1: Keep the Property

Holding the land may allow it to appreciate over time.

Many Massachusetts communities continue experiencing strong long-term land appreciation, particularly in Greater Boston.

Keeping the property may make sense if:

• Future development is possible
• You want to preserve family ownership
• Future generations may benefit

Option 2: Build on the Property

Depending on zoning, inherited land may be suitable for:

• Single-family homes
• Multi-family housing
• ADUs
• Mixed-use development
• Commercial projects

Many inherited lots are significantly more valuable after obtaining permits or zoning approvals.

At Velney Development, we often help families evaluate development potential before they decide whether to sell.

Option 3: Lease the Property

Sometimes the best option is neither selling nor building.

Vacant land may generate income through:

• Agricultural leases
• Parking leases
• Equipment storage
• Commercial uses
• Solar opportunities (where appropriate)

This allows families to retain ownership while producing income.

Option 4: Sell the Property

For many heirs, selling simply makes the most sense.

Reasons include:

• No plans to develop
• Out-of-state ownership
• Property maintenance costs
• Family disagreements
• Estate settlement
• Paying estate expenses
• Simplifying inherited assets

Selling can also free up capital that may better serve your family’s future goals.

Selling Inherited Land in Massachusetts

There are generally three approaches.

Sell Yourself (FSBO)

This saves commission but requires:

• Pricing the land
• Marketing
• Negotiations
• Buyer screening
• Purchase agreements
• Closing coordination

Land sales are usually much more complex than selling a house.

Hire a Real Estate Brokerage

A land broker can often help maximize exposure and pricing.

They may already have relationships with:

• Builders
• Developers
• Investors
• Land buyers

This option often provides the broadest marketing reach.

Sell Directly to a Developer

Sometimes selling directly to a Massachusetts developer is the quickest path.

Developers evaluate:

• Zoning
• Density
• Utilities
• Site conditions
• Wetlands
• Access
• Development potential

A parcel that appears ordinary to a homeowner may be extremely valuable to a local developer.

Families Inheriting Property Together

One of the most difficult situations involves multiple heirs.

Questions often include:

• Should everyone sell?
• Who pays expenses?
• What if one sibling wants to keep it?
• Can someone buy out another heir?
• Should the property be partitioned?

These situations are often as much emotional as financial.

Open communication—and involving attorneys, accountants, and real estate professionals early—can help families reach better outcomes.

Why Local Development Knowledge Matters

Not every piece of inherited land should be sold immediately.

Sometimes obtaining additional information first can significantly increase value.

At Velney Development, we help Massachusetts families evaluate:

• Development potential
• Zoning opportunities
• Highest and best use
• Builder interest
• Market value
• Local demand
• Feasibility before selling

Sometimes selling immediately is the right decision.

Sometimes waiting makes financial sense.

Sometimes obtaining permits or approvals first can increase the property’s value substantially.

Our goal is to help families make informed decisions—not rush into one solution.

Final Thoughts

Inheriting land is often emotional because it follows the loss of someone important.

At the same time, inherited real estate represents an opportunity.

Whether you decide to keep the property for future generations, develop it, lease it, or sell it, taking time to understand Massachusetts law and working with experienced professionals can help you avoid costly mistakes.

Every property—and every family—is different.

The right decision is the one that best aligns with your family’s financial goals, long-term plans, and the legacy your loved one hoped to leave behind.

If you’ve inherited land anywhere in Massachusetts and aren’t sure what your next step should be, Velney Development is here to help you evaluate your options. We work alongside attorneys, surveyors, engineers, architects, and tax professionals to help property owners understand the development potential and market value of inherited land before making a major decision.

Frequently Asked Questions

Does Massachusetts have an inheritance tax?

No. Massachusetts does not impose an inheritance tax on beneficiaries. However, Massachusetts does have an estate tax for estates exceeding certain thresholds.

Do I automatically own inherited property?

Not necessarily. Ownership typically transfers after the estate administration or probate process and the appropriate legal documents are recorded.

Will I owe capital gains tax if I sell inherited land?

Possibly. Thanks to the stepped-up basis rules, many heirs receive a new tax basis equal to the property’s fair market value at the date of death, which may reduce taxable gains if the property is sold soon afterward. Your CPA can advise based on your circumstances.

Should I sell inherited land immediately?

Every situation is different. Before selling, consider development potential, zoning, family goals, tax implications, and current market conditions.

Can Velney Development buy inherited land?

Yes. Depending on the location and development potential, Velney Development may purchase inherited land directly or help owners evaluate the property’s highest and best use before selling.

Should I talk to an attorney before selling inherited property?

Absolutely. A Massachusetts probate attorney and CPA can help ensure the title is clear, taxes are addressed correctly, and the transaction complies with current Massachusetts law.