Selling
Inheriting a House in Colorado: Taxes and Selling
Colorado has no inheritance tax or estate tax.
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Colorado has no inheritance tax and no estate tax (Colorado Legislative Council Staff). The federal estate tax applies only above $15,000,000 per person for 2026 deaths (IRS). An inherited house takes a basis equal to its value on the date of death, so a prompt sale produces little or no capital gain (26 U.S.C. 1014).
Do I owe tax when I inherit a house?
- No Colorado inheritance tax. No Colorado estate tax. The state repealed its estate tax in 2005 (Colorado Legislative Council Staff).
- Federal estate tax starts above $15,000,000 per person for 2026 deaths (IRS).
What is a stepped-up basis?
- Your basis is the home's fair market value on the date of death (26 U.S.C. 1014).
- Example: your parents paid $300,000 in 1995. The home is worth $1.2 million at death. You sell for $1.2 million. Your gain is near zero before selling costs.
- Get a date-of-death value in writing. An appraisal or our Smart Pricing Report documents it.
- This is not tax advice. Your CPA runs your numbers.
Who has the right to sell it?
- In probate: the personal representative the court appoints.
- With a beneficiary deed on record: the named beneficiary, outside probate.
- In a trust: the trustee.
- Colorado's small estate affidavit does not transfer real estate (Colorado Judicial Branch, JDF 999).
How long before we can close?
- The personal representative can list during probate.
- Creditors get at least 4 months after the first published notice to file claims (C.R.S. 15-12-803).
- Your probate attorney confirms when proceeds can be distributed.
Sell, keep or rent?
- Sell: use the stepped-up basis and split cash among heirs.
- Keep: every heir agrees in writing on who pays taxes, insurance and repairs.
- Rent: you take on landlord duties, and future gain is measured from the date-of-death value.
What do we do first?
- Lock the house, keep utilities on and call the insurer about vacancy.
- Do not clear out belongings until the inventory is done.
- Get a date-of-death value, then decide: sell, keep or rent.
- Keep every bill you pay for the house. The estate reimburses or credits them.
Quick answers
Questions, answered.
Does Colorado have an inheritance tax?
No. Colorado has no inheritance tax and no estate tax (Colorado Legislative Council Staff).
Do I pay capital gains on an inherited house?
Only on gain above the date-of-death value (26 U.S.C. 1014). A prompt sale carries little gain. Ask your CPA.
Can I sell an inherited house before probate closes?
Yes. The personal representative has authority to sell during probate. Your attorney sets the timing for paying out proceeds.
Sources
Where the numbers come from.
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Kenna Luxury Real Estate is a division of the Kenna Real Estate Group at Keller Williams DTC (KWDTC).