Inheriting a house may seem like a windfall at first—until the bills roll in. Suddenly, that “gift” from a relative turns into a financial burden you weren’t prepared for. Whether it’s sky-high property taxes, unpaid mortgage balances, costly repairs, or just the monthly upkeep, the reality sets in fast: you’ve inherited a house you can’t afford.
But that doesn’t mean you’re stuck. With the right strategy, you can take control of the situation, either by making the home affordable, selling it on your terms, or finding another financially sound solution. Here are five practical steps to take when an inherited house is threatening to sink your budget.
1. Understand Exactly What You’ve Inherited
Before you make any decisions, pause. You need to understand everything about what you’re dealing with. That includes whether the property is fully paid off or comes with a mortgage. Are there liens against it? Is it still in probate? Who else might have legal ownership or claim?
If you’re not sure where to start, request a title report, check with the probate court (if the estate is still in process), and speak with the estate executor. If there’s a mortgage, call the loan servicer to determine what’s owed and whether you’re responsible for it. This step may not be glamorous, but it’s non-negotiable. You can’t plan for what you don’t fully understand.
2. Calculate the True Cost of Keeping the Property
It’s not just about the mortgage. Even if the home is paid off, the ongoing costs can pile up fast.
Ask yourself:
-
How much are property taxes each year?
-
What does it cost to insure the house?
-
Is there deferred maintenance or serious repair work needed?
-
Are utilities and basic upkeep within your current budget?
If the house is in another state or in a condition that requires attention before it can be occupied or sold, those costs can multiply.
It’s tempting to hold on for emotional reasons, but you need a clear view of what keeping the house really means financially. Write out all potential costs and compare them to your monthly income and long-term financial goals. You’re not failing anyone by being honest about what you can or can’t carry.
3. Decide If You Want to Keep, Sell, or Rent It Out
Once you know the details, it’s time to decide: Do you want to keep the home, sell it, or turn it into a rental property?
If you want to keep it, you’ll need to explore how to make the costs manageable. That might mean refinancing your mortgage, applying for property tax relief (especially if you live in a state with programs for heirs or low-income owners), or making your home more energy-efficient to reduce monthly bills.
If you want to sell it, consider whether the home is ready for the market or needs repairs to fetch a fair price. You may also want to consult a real estate agent who has experience with inherited or probate properties.
If you’re considering renting it out, ask yourself if you’re ready to be a landlord or if you’d prefer to hire a property manager. Rental income can be a great way to offset costs, but it also comes with added responsibility.
No matter your choice, your decision should reflect what’s financially smart for you—not just what feels like the “right thing” to do.
4. Talk to a Tax Professional
Inheriting a house comes with potential tax consequences, and they vary depending on whether you keep, rent, or sell the property.
For example, many people don’t realize that inherited homes get a stepped-up basis, meaning if you sell the home shortly after inheriting it, you may not owe much (or any) capital gains tax. But if you keep it and it appreciates in value, taxes could be more significant down the road.
On the flip side, if the house generates rental income, you’ll need to report that on your taxes, and you may be eligible for deductions related to repairs, insurance, and property management. A good tax advisor can walk you through the implications of your decision and help you avoid costly surprises later.
5. Don’t Be Afraid to Let It Go
Let’s say you’ve looked at all the numbers and reviewed your options, and you still can’t afford to keep the house or don’t want to. That’s okay.
There’s no shame in choosing to sell an inherited property that doesn’t serve your life. In fact, letting go of the home may allow you to preserve the value of the gift by converting it into something that does support your goals, whether that’s paying off debt, investing in your future, or buying a home that suits your lifestyle better.
If the property is in poor condition or the costs of maintaining it are overwhelming, you might even consider working with a cash buyer or real estate investor. Just be sure to vet anyone you work with, and don’t rush into a deal because you feel pressured.
Letting go isn’t the same as giving up. It’s choosing peace, and sometimes, that’s the most responsible move you can make.
You Have Plenty of Options
Inheriting a home you can’t afford isn’t a dead end. It’s a financial crossroads. With a clear understanding of what you’ve inherited and what it’s really costing you, you can make smart, grounded decisions that work for your budget, not just your emotions.
This isn’t about guilt or obligation. It’s about aligning what you’ve been given with what you truly need and building a future that reflects your values and financial reality.
Have you ever inherited a house or know someone who did? What would you do if the cost of keeping it outweighed the benefit of owning it?
Read More:
Should You Be Able to Inherit Wealth Tax-Free? Here’s Why Some Say No
10 Financial Faux Paus Your Parents Are Making That Is Putting Your Inheritance At Risk
Riley is an Arizona native with over nine years of writing experience. From personal finance to travel to digital marketing to pop culture, she’s written about everything under the sun. When she’s not writing, she’s spending her time outside, reading, or cuddling with her two corgis.
Read the full article here
