Selling land can feel exciting. You finally get to cash out on an investment or let go of property you don’t use anymore.
But then the worry sets in, and you start asking questions.
How much of that cash is actually mine to keep? Who do I owe money to in order to unload the land?
The government wants its share, and figuring out the tax bill can feel overwhelming.
If you’re wondering, “how much do I pay in taxes when I sell land in North Carolina?”, then we’re here to clear up the confusion.
We’ll walk you through exactly what you need to pay when you sell land in North Carolina. It’s simpler than you think once you break it down step by step.
Why Do Taxes Matter So Much for Land Sellers?
Selling vacant land isn’t exactly like selling the house you live in.
When you sell your primary home, you often get a huge tax break called the “homestead exemption.” That exemption usually lets you pocket a lot of profit tax-free.
However, in most cases, vacant land doesn’t get that special treatment. Every dollar of profit you make on land might be taxable, so your tax bill could be bigger than you expect.
To start to understand what you may owe, you need to know a few specific terms.
Here are three key terms that will show up on your tax forms:
Adjusted Cost Basis
This is the purchase price plus any costs you paid to buy the land, like legal fees or survey costs. It also includes the cost of any improvements you made, like clearing brush or installing a fence. The higher your basis, the lower your taxable profit.
Excise Tax
This is a specific tax charged by North Carolina on the transfer of real estate. It’s the fee you pay to the county to officially record the deed when you sell. It’s sometimes called a “revenue stamp” or “deed stamp.”
Step-Up in Basis
This is a game-changer if you inherited your land. Instead of using the price your parents paid for the land, the amount you pay is calculated by the land’s value on the day they passed away. This can wipe out huge potential tax bills for heirs.
Federal Capital Gains Tax
Unsurprisingly, the largest tax payment you’ll likely owe is to the federal government.
This is capital gains tax, and it’s a tax on the profit you make from selling an asset like land.
The amount you pay depends heavily on how long you owned the property…
Short-Term Capital Gains
If you owned the land for one year or less, you’re in the short-term category.
The IRS treats this profit like your regular job income. It gets added to your salary and taxed at your normal income tax bracket.
If you’re already in a high tax bracket, then this can become expensive.
Long-Term Capital Gains
If you owned the land for more than one year, you get a break, since the government rewards you for holding onto the investment.
You’ll pay a lower tax rate, usually 0%, 15%, or 20%, depending on your total income.
Most people fall into the 15% bucket. That’s usually much lower than standard income tax rates.
Here is a quick look at the difference:
- Held less than a year: Taxed up to 37% (ordinary income).
- Held more than a year: Taxed at 0%, 15%, or 20%.
- Income level: Higher earners pay the 20% rate.
- Low earners: Some might pay 0% on long-term gains.
Key takeaway: It almost always pays to hold the land for at least a year and a day.
North Carolina Income Tax
Let’s get to the heart of the issue: how much you pay in taxes when you sell land in North Carolina.
In some states, capital gains get special treatment, but North Carolina simplifies the process. The state treats your land sale profit the same as any other income.
Your land sale profit is taxed at the state’s flat income tax rate. As of now, North Carolina’s personal income tax rate (while slightly decreasing each year) hovers at around 4.5%.
So, what will you owe? You calculate your profit the same way you do for federal taxes:
- Take your sale price and subtract your adjusted cost basis.
- Apply that flat state tax rate to the profit.
It’s an extra cost you need to factor in so you aren’t surprised.
What’s North Carolina’s Excise Tax?
Excise tax is a tax that’s unique to the actual closing process.
You pay excise tax specifically to the county where the land is located. It’s often called “revenue stamps” because back in the day, they actually put a stamp on your deed.
The rule in North Carolina is pretty straightforward:
- You pay $1.00 for every $500 of the sale price.
- This tax is calculated on the total sale price, not just your profit.
Even if you lose money on the sale, you still typically owe this excise tax.
Here is how it breaks down:
- Rate: $1 per $500 of value.
- Minimum: Even small sales generally trigger the tax.
- Who pays: The seller usually pays this at closing.
- Rounding: The value is rounded up to the next $500.
For example, if you sell land for $100,000, you divide that by 500. That equals 200.
So, you would pay $200 in excise tax.
Property Taxes
Don’t forget about your regular yearly property taxes.
You might think you’re off the hook because you’re selling, but you still owe taxes for any part of the year you owned the land.
This is called “prorated property tax,” and the closing attorney or title company will do the math for you.
For example, if you sell the land on June 1st, you owned the property for half the year. Therefore, you’ll pay half of that year’s tax bill at closing.
The buyer picks up the tab for the rest of the year. This system ensures everyone pays their fair share.
A Real-Life Example: The Walker Family
Let’s look at a detailed example to see how this math works in the real world.
Meet the Walkers.
They bought a nice 10-acre parcel of land in Ashe County, North Carolina, back in 2010.
Now, it’s 2026, and they are ready to sell the land.
Here are the details of their deal.
The Walkers’ Land Sale
| Item | Amount |
| Original Purchase Price (2010) | $30,000 |
| Closing Costs When Bought | + $1,000 |
| Clearing & Improvements | + $4,000 |
| Total Adjusted Cost Basis | $35,000 |
| Sale Price (2025) | $105,000 |
| Selling Costs (Agent/Fees) | – $5,000 |
| Net Sale Proceeds | $100,000 |
First, we have to figure out their taxable profit.
They sold it for $105,000, but they spent $5,000 to sell it, so they netted $100,000. Their “basis” (the amount of money they put into the land) is $35,000.
So, their total taxable gain is $65,000 ($100,000 minus $35,000).
Now let’s calculate the taxes they will likely owe.
Estimated Tax Breakdown
| Tax Type | Calculation | Estimated Cost |
| Federal Capital Gains (15%) | 15% of $65,000 profit | $9,750 |
| NC State Income Tax (~4.5%) | 4.5% of $65,000 profit | $2,925 |
| NC Excise Tax | $105,000 ÷ 500 | $210 |
| Net Investment Income Tax | (Assumed $0 for avg income) | $0 |
| Total Estimated Taxes | $12,885 |
In this scenario, the Walkers walk away with a nice check since they sold for $105,000.
After paying the selling costs and the estimated taxes, they keep roughly $87,115.
Wait, that math needs a quick adjustment…
They keep the proceeds minus the taxes they will pay later. At the closing table, they get the check for $105,000 (minus the $210 excise tax).
They have to save that $12,675 ($9,750 + $2,925) to pay the IRS and the state when they file their tax return next year.
Timeline of Payments:
- At Closing (Day 1): The $210 Excise Tax is deducted immediately from their check.
- At Closing (Day 1): Prorated property taxes for the current year are deducted.
- April 15th (Next Year): They write a check to the IRS for the $9,750 Federal Capital Gains tax.
- April 15th (Next Year): They write a check to North Carolina for the $2,925 State Income Tax.
What If You Inherited the Land?
This is the most common question we get at Front Porch Land Group.
Many people we talk to inherited land from a parent or grandparent. If that’s your situation, then we have some good news for you.
You usually don’t have to use the original price your parents paid as your cost basis. Remember, you get to use the “Step-Up in Basis.”
To use our former example, let’s say the Walkers’ kids inherited that same land instead of the Walkers selling it themselves.
If the land was worth $105,000 on the day the parents passed away, that becomes the new basis.
If the kids turn around and sell it for $105,000 a few months later, their profit is zero.
The Math for Heirs:
- Sale Price: $105,000
- Stepped-Up Basis: $105,000
- Taxable Gain: $0
That means $0 in federal capital gains tax and $0 in state income tax.
They would still pay the excise tax and closing costs, but the big tax bill disappears.
This is a huge benefit for families passing down assets. It simplifies things and keeps the wealth in the family.
Deducting Your Selling Expenses
Here’s a bit of advice that can serve all land sellers: You can lower your tax bill by keeping good records. As a bonus, you don’t pay tax on the money you spent to sell the property.
Here are common deductible selling costs to help keep fees down:
- Real Estate Agent Commissions: If you use an agent, their fee comes right off the top.
- Legal Fees: Money paid to an attorney to prepare the deed or handle closing.
- Survey Costs: If you had to pay for a new survey to close the deal.
- Title Insurance: If the seller paid for the owner’s policy (though buyers often pay this).
- Recording Fees: The cost to record documents at the county courthouse.
If you sell directly to a land buyer like us, you might not have agent commissions.
But you might still have other small costs. We often cover all closing costs for our sellers, which makes the math even easier.
If we pay the closing costs, you don’t deduct them because you didn’t pay them. But you also get to keep 100% of the offer price we agreed on.
Can You Avoid Capital Gains Taxes?
Nobody likes paying taxes if they don’t have to.
There are a few legal strategies to defer or lower these taxes:
1031 Exchange
This is a tool for investors. It lets you sell one property and use all the money to buy another “like-kind” property. If you follow the strict rules, you don’t pay taxes on the gain right now. You defer them until you sell the new property years later.
Installment Sale
This is where you agree to let the buyer pay you over time instead of all at once. You only pay taxes on the portion of the money you receive each year. Since it spreads the tax hit out over several years, it might keep you in a lower tax bracket.
Opportunity Zones
If your land is in a designated distressed area, you might get tax breaks for investing your profits into funds that improve that area. This is a very niche strategy, but it can be powerful.
Summary of What You Owe
Let’s wrap it up so you have a simple checklist.
When you sell land in NC, here is who gets paid:
- The IRS: Federal Capital Gains Tax (usually 15% of profit).
- NC Dept of Revenue: State Income Tax (approximately 4.5% of profit).
- The County: Excise Tax ($1 per $500 of sale price).
- The County: Prorated Property Tax (for the months you owned it this year).
It looks like a lot of different hands are in the pot. But remember, you only pay the weightier taxes if you made a profit.
And if you inherited the land, that profit might be calculated as zero.
Simplifying the Sale
Taxes are complicated, but selling your land doesn’t have to be.
At Front Porch Land Group, we talk to landowners every day who just want a clear answer.
We make our process straightforward:
- We cover the closing costs on our end, so the offer price we give you is the cash you get at closing (minus your prorated taxes).
- We can make the tax process smooth and easy.
- We’ll give you a fair, transparent offer and close on your timeline.
- We can close in 30 to 60 days, giving you the cash you need without the stress you don’t.
If you have a piece of land in North Carolina and want to know what it’s worth in cash today, reach out to us. You handle the taxes, and we’ll handle the rest.