Real Estate Annexation: A Guide For Beginner Investors

Real estate annexation is becoming more of a reality in the wake of a growing population. As major metropolitan areas grow larger and seek to increase their jurisdiction, those in the path of expansion will likely experience some significant changes. Homeowners and investors, in particular, will find that real estate annexation can change the entire dynamic of a property and its underlying value. As a result, it’s more important than ever to not only know what real estate annexation is but how it affects real property.

five 3-storey houses in-lined on street

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What Is Annexation In Real Estate?

Annexation in real estate is a phrase used to describe the incorporation of one thing into another. As it relates to the real estate industry, annexation typically refers to two situations: local municipalities expanding their jurisdictions by taking over adjacent land or the act of homeowners physically attaching personal property to an existing home. The two types of real estate annexation couldn’t appear more different on the surface. Still, the important takeaway is that each involves the incorporation of outside elements into an existing entity.

Annexation real estate practices can get convoluted rather quickly, which begs the question: What are the types of real estate annexation, and what do they mean for those they impact?

Types Of Real Estate Annexation

On the one hand, annexation involving land refers to the forcible acquisition of unincorporated territories by adjacent incorporated municipalities. Simply put, annexation involving land is a strategy by which local governments may expand their jurisdiction to cover more area. Cities and counties, in particular, annex adjacent land to expand their borders and accommodate growing populations. By annexing nearby land and incorporating it into an existing municipality (the power of which to do so is given by the state), cities and counties may exercise sensible growth strategies and take advantage of new taxable revenue. However, it is worth noting that when land is annexed, the existing laws and tax codes.

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