Question: I am considering buying a nice home on a half-acre lot in a high-end California subdivision. All homes in this subdivision are built on half-acre lots. However, this subject home is special in that there is a designated non-buildable, open-space area of 8 acres across the street from this house (still located within the same subdivision). If I buy this house, title to these non-buildable 8 acres will transfer along with the house.
Here are some of my questions, if you don’t mind helping me sort this out:
1. Are there any advantages to owning these “special” 8 acres of land in this subdivision if you cannot build on them?
2. What can you do with these 8 acres, if anything?
3. Can this increase my tax liability (now or in the future), or is tax liability based purely on the property’s purchase price?
4. Are there other liabilities that I should consider but haven’t thought of?
5. Is there any value to this non-buildable land?
6. I have considered creating a community garden or public project of that sort. If possible, are there any tax advantages that I can gain from doing this? Are there any arrangements that I can make for public benefit in order to receive a tax benefit in return?
7. Basically, is this vacant land more likely to be a liability (e.g., clearing brushfire shrubs & maintenance) than it is to be an asset (value)?
Great questions and you have thought of many of the right considerations.
1.) The best advantage of owning “open space” is not having a view of anything but open space. If behind this open space there is a warehouse and therefore even though you have have open space you are still looking at a warehouse in the distance; does it matter?
2.) What you can do with the 8 acres is dependent on its zoning. It is not uncommon that these open spaces are set aside by city/county requirement when the builder purchased the entire plot(s) to make sure that there is room for “nature” and it is a municipalities way of keeping California from becoming a complete concrete jungle. The seller should be able to pass on CC&Rs (Codes, Covenants, and Restrictions) that tell you what you need to know about usage.
3.) The open space tax-ability will be dependent on zoning and will also be determined on whether it is considered a combined parcel (therefore 1 parcel) with your home/lot or a separate parcel. Tax rates are mostly determined by zoning and structures so you will have to consult with the city/county municipality to understand the tax application and costs.
4.) The liability that comes to mind is two fold – a.) Upkeep b.) planned usage Again, look at the CC&Rs and zoning to answer these questions. For example, if the land is deemed agriculture are you ready to farm or raise goats? Can it be leased? Will you be required to keep so many healthy trees on it? Are there mineral/water rights that are known/unknown about the property?
5.) Open Space in California is one of its treasure. Many have purchased land and then donated back to the state with the expressed requirement of keeping it open. The value can be to you as an individual (protecting your view – having a place to ride your quads -if so allowed) or to the general public. Comes back to zoning and CC&Rs.
6.) I am not a tax professional but assume there could be tax benefits based on the usage. Best to consult with a tax professional.
7.) Again, refer to CC&Rs, zoning, and local municipalities about what your responsibilities are for maintaining and “protecting” the land.