Inheriting a house can be the windfall you never expected to receive in your life. You may have been surprised with the news of a loved one gifting you with their property, or you may have known for years. In any case, there are critical financial and emotional decisions you must make after inheriting real estate.
Continue reading as we discuss what to expect during the process and some common situations you may encounter.
Colorado inheritance tax
You’re probably curious how to avoid paying capital gains tax on inherited property. The good news is that there is no inheritance tax in the state of Colorado. According to SmartAsset, some states might charge this tax if the decedent dies in the state even if their heir lives elsewhere.
Keep in mind that you still aren’t getting a “free” house. Whether you choose to sell the residence or keep it, you may need to perform some upgrades. Research which renovation projects are worth the investment, and think about using a home improvement loan to pay for the work.
Inheriting a house with siblings
The easiest way to handle this scenario is to sell the house and split the profits. Unfortunately, no two sibling relationships are the same and each one presents different challenges.
Let’s say you inherit your parents’ house along with your sibling. You consider them your best friend and will do everything in your power to ensure you both receive an equal share of the property. Even with such a cordial relationship, there are sure to be disagreements.
Maybe your sibling wants to sell the house but you want to keep it in the family. This is where a buyout comes into play. A buyout allows you to give your sibling cash for their share and then transfer the deed solely into your name.
So what happens if you can’t reach an agreement with your sibling? Your best bet is to contact a lawyer regarding your right of possession. While seeking legal counsel isn’t exactly fun, you want to be sure that you and your sibling can find a resolution with the property and start to move on with your lives.
Inheriting a house with a mortgage
This situation typically requires more thought than if someone inherited a property that was paid off. First things first: the lender cannot demand full payment of the loan’s balance before transferring the property. Ultimately, you decide to either take over the mortgage and resume current monthly payments or refinance the loan based on market conditions.
If you can’t afford the payments, communicate that to the mortgage company. The last thing you want to do is stand pat and end up watching the home go into foreclosure. Again, be proactive and get assistance from an experienced estate planning attorney to ensure a smooth transition.
Sell your house with confidence
Often, the easiest way to handle an inherited property is to sell it. You’ll undoubtedly recall the years of memories in the home and perhaps second-guess your decision at times. But selling the property enables you and your family to enjoy an added level of financial security.
Think of what you could do with those extra funds. Perhaps you would decide to pay off your own house with the money, or even put it toward an investment home. There’s also the possibility of contributing some of the profit toward an organization in your loved one’s honor.
Whatever you choose to do, know that the team at American Home Agents is here to help. Our real estate agents can navigate just about any type of residential real estate transaction, including scenarios involving inherited properties. Trust them to walk you through the process while being mindful of your circumstances.
Don’t make the mistake of hiring the first realtor you find. Spend some time determining the right real estate agent for selling your home. Remember that you deserve an agent who will go above and beyond to earn your business.
We’d love the chance to earn your business at American Home Agents. We’re genuinely committed to each of our clients, and we’re excited to assist you in any way we can. See for yourself what separates American Home Agents from the other real estate brokerages in Denver.
Give us a call at (303) 695-5900 or get a competitive market analysis to help you price your home.