Probate taxes, mortgages and reverse mortgages in Colorado
The money questions families ask us most, answered plainly. Confirm the details for your estate with a CPA or attorney.
Taxes
Colorado has no estate tax and no inheritance tax. The federal estate tax applies only to estates over $15 million per person for deaths in 2026, so very few families owe it.
Stepped-up basis. Inherited property usually gets a new tax basis equal to its value on the date of death. If the house sells for close to that value, there's little or no capital gain. That's one reason selling soon after death is often tax-efficient. Keep the date-of-death value on file (an appraisal or broker opinion of value).
Property taxes keep coming due. Missed property taxes can lead to a tax lien sale, so keep them current.
A house with a regular mortgage
The loan doesn't disappear when the owner dies. Federal law (the Garn-St Germain Act) stops a lender from calling the loan just because the house passed to a relative at death. Someone still has to keep making payments, or the estate falls behind and late fees and foreclosure become a risk. The personal representative can request a payoff statement from the lender.
A house with a reverse mortgage
The loan becomes due after the last borrower dies. Heirs generally get about six months to sell or pay it off, and the servicer may grant extensions. A standard reverse mortgage (HECM) is non-recourse: heirs never owe more than the house is worth, and heirs who keep the house can usually pay off the lesser of the loan balance or 95% of appraised value. Contact the servicer early and get every deadline in writing.
Owe more than it's worth?
If the debt is higher than the house's value, the estate may need a short sale. We handle those too: ShortSaleHelpColorado.com.
Questions
Does Colorado have an estate tax or inheritance tax?
No. Colorado has neither. Only the federal estate tax could apply, and only to estates over $15 million per person for deaths in 2026.
Do I owe capital gains tax when I sell an inherited house?
Usually only on any increase in value after the date of death, because inherited property generally gets a stepped-up basis. Selling soon after death often means little or no taxable gain. Confirm with your CPA.
Can the lender call the loan when the owner dies?
Not just because ownership passed to a relative at death. Federal law (12 U.S.C. 1701j-3) protects those transfers. Someone still needs to keep payments current.
Talk it through with a real person, free
A free, confidential 30-minute consultation. We'll look at the house, the estate's situation and what the family wants, and lay out every option, even the ones that don't involve us. English or Polish.
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