Inheriting a house from a family member can be a wonderful thing, but you should know about the possible hidden expenses that might come with it. It’s completely normal to have mixed feelings during this time. You could be facing sadness, unexpected bills, family dynamics, and more—all of which can be hard to handle. If you’re taking over an inherited property, understanding the costs involved is crucial.
Here’s a summary of some costs you might encounter when inheriting a property in Colorado, so you can make the best choices as you go through this process.
Does Colorado Have an Inheritance or Estate Tax?
The good news is that Colorado does not impose inheritance or estate taxes. However, heirs still face potential tax responsibilities, such as:
- Final federal and state income tax returns for the deceased, due on Tax Day of the following year.
- Federal estate/trust income tax returns, due by April 15 of the year following death.
- Federal estate tax returns, required only for estates exceeding $13.99 million in 2025.
To file these returns, the estate may require an Employer Identification Number (EIN) from the IRS, which can be obtained online or by mail.
Property Tax Obligations
When the house becomes yours, you will need to pay the property taxes. If you get a house through inheritance, that means you also take on the property tax bill. The amount you pay for taxes can be very different based on where the house is. Some places have high property taxes, which can add to the costs of keeping the home.
You might also have to deal with estate taxes if there isn’t enough money in the estate to cover them. In certain cases, capital gains taxes may apply, and you could face a state inheritance tax, depending on where the house is located. In any case, as the new owner, you should expect to pay a significant amount in taxes. It’s important to plan for these taxes so you aren’t surprised later.
Liens and Debts
Inherited properties may come with existing liens or debts that can complicate the transfer process and create unexpected financial burdens. Common examples include unpaid mortgages, home equity loans, property tax liens, or contractor liens for incomplete work.
If these obligations are not addressed, they can lead to legal challenges, delays in transferring the property, or even foreclosure. Before accepting an inherited property, it’s essential to conduct a title search to identify any outstanding liens. Heirs may need to negotiate with creditors, use proceeds from the estate to pay off debts, or explore refinancing options to clear these liabilities. Consulting with a real estate attorney or financial advisor can help ensure a smooth resolution of these issues.
Utility Bills
No matter if someone is living in the house or not, it’s important to keep the utilities running. You’ll need electricity and water, and those bills can pile up fast when you own the property. This is why many people who inherit homes in Colorado look for quick selling options. It just doesn’t make sense to pay for the expenses of an empty house. When there are no immediate plans for the property, selling it quickly can often be the best choice.
Maintenance and Repair Costs
Owning a house means you have to keep it in shape. Does your home have a yard, swimming pool, or maybe some fruit trees? All of these features need regular care. Whether you choose to do the upkeep yourself or hire someone else, you will spend time and money on maintaining your home. You also need to think about repairs, cleaning, and sorting through your things.
If the house you received hasn’t been taken care of, you might find yourself facing expensive repairs to make it safe and livable. Even if the home is in decent shape, it’s smart to plan for routine maintenance costs like mowing the lawn, shoveling snow, and tidying up.
Non-Probate Assets in Colorado
If a decedent has a valid will at the time of death, probate can be avoided. Regardless, some assets bypass probate entirely, simplifying the inheritance process. These include:
- Retirement accounts (e.g., IRA, 401(k)) with designated beneficiaries.
- Pay-on-death (POD) bank accounts.
- Transfer-on-death (TOD) or jointly owned real estate.
- Life insurance proceeds.
- Assets held in a living trust.
Finding out if these assets are properly designated can save you time and money by avoiding probate court.
Mediation Expenses
When someone we love passes away, it can lead to disagreements among family members. If you have siblings or others who might want a part of the estate, you could end up facing mediation costs. One easy way to handle this is through a buyout or selling the property quickly and sharing the money. RealPro HomeBuyers can help you sell your property fast and fairly, closing the deal in just a few days. This approach has helped many families avoid the hassle of mediation or going to court.
There are many costs that come with owning a home, and these are just a few. You may also need to cover appraisals, cleaning, listing fees, and more. By selling the house quickly and in its current condition, you can save money and sell the property much sooner.
Sell Your House to Avoid Costs
When you choose to sell an inherited home, it’s important to think about the costs involved in selling. These can include things like fees for real estate agents, closing costs, and any necessary repairs or updates to attract buyers. These expenses can add up fast, so it’s crucial to know what you might need to invest to sell the property. On the bright side, selling directly to RealPro HomeBuyers can help you avoid all these selling costs.
How RealPro HomeBuyers Can Help
If you have questions about receiving a property through inheritance in Colorado, RealPro HomeBuyers is here to provide the answers. We realize this can be a challenging time, and we approach every situation with care and empathy. Our goal is not to pressure you into a decision that doesn’t suit you – we will present the information clearly and allow you to make the choice that feels right!
Inheriting a property in Colorado might come with unexpected costs. RealPro HomeBuyers can assist you with any inherited property you don’t want in the Colorado area, making everything easier for you. A straightforward sale to RealPro HomeBuyers lets you sell quickly, avoiding extra expenses and hassle so you can enjoy your inheritance without added worry. Reach out to us today to discover more about how we can assist with your inherited property in Colorado. (720) 740-2575