The True Cost of Inheriting a Home (Part 1)

The Hidden Financial Realities of Homeownership

The largest generational transfer of wealth in U.S. history is underway. Over the next few decades, baby boomers are expected to pass down more than $84 trillion to younger generations, with an estimated $18–19 trillion tied up in residential real estate.[1] For many families, that means a child or grandchild will inherit a home.

At first glance, inheriting a house feels like a windfall. Rising housing prices have made homeownership out of reach for many Americans, so the opportunity to step into property ownership without a traditional purchase can feel life-changing. But while a home is often given as a gift of stability and security, it can quickly become a financial burden if heirs are not prepared for the true costs.

Beyond the Mortgage

One of the biggest misconceptions is that a mortgage automatically disappears when a homeowner passes away. In reality, if there’s still a loan balance, the bank expects payments to continue. An heir may be able to assume the mortgage, but this isn’t always guaranteed. In some cases, refinancing—or even paying off the balance in full—may be required.

Even if the mortgage is manageable, it’s far from the only expense. Ongoing costs like property taxes, insurance premiums, utilities, and maintenance can quickly add up.

The Hidden Costs of “Free” Homes

A 2025 Bankrate study estimates that the average annual cost of homeownership—outside of the mortgage—is around $21,000.[2] That figure covers maintenance, utilities, property taxes, homeowners insurance, and internet/cable. For heirs inheriting an older property or one in a high-tax area, those costs may be even higher.

Some of the most common overlooked expenses include:

• Property Taxes: Even after the mortgage ends, taxes never do. In some states, the home may be reassessed at its current market value after the owner’s death, potentially spiking the tax bill.[3]
• Utilities: Essential services like water, heat, electricity, and trash pickup must stay active, even if the home sits vacant for months. Otherwise, damage like frozen pipes or mold could add thousands in repairs.[4]
• Maintenance and Repairs: Routine upkeep such as lawn care or snow removal may be legally required. Larger repairs—like a roof replacement or HVAC system failure—can cost tens of thousands of dollars.[5]
• Insurance: Policies must be updated after the owner’s death. Premiums can rise, and if the home remains empty, insurers may require a more expensive vacant home policy.[6]

And that’s before accounting for cleanup costs, moving expenses, or replacing outdated appliances. Clearing out decades’ worth of belongings—sometimes with little resale value—can become a time-consuming and expensive task.

A Blessing or a Burden?

Inheriting a home can absolutely be a gift. For families with limited access to the housing market, it might be the only way younger generations ever own property. But without clear planning and open conversations, that same home could lead to financial stress, family disagreements, or a quick sale made under pressure.

In the next part of this series, we’ll look at what happens during the transition period—when the original homeowner has passed, but before heirs take full ownership. Who pays the bills then, and how can families prepare?

Takeaway for Part 1: A home may feel “free” to inherit, but ongoing costs average more than $20,000 per year—before a single mortgage payment is made. Families should discuss these realities well in advance so heirs aren’t caught off guard.

To learn more about estate administration, keep an eye on our Events page located at: https://www.wagnerlegalmn.com/events/.

If you need assistance after a loved one has passed, or you would like to discuss your estate plan, please contact us to get started.

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[1] Cerulli Associates, U.S. Wealth Transfer Outlook 2024 (2024), https://www.cerulli.com/

[2] Bankrate, Hidden Costs of Homeownership Study 2025 (2025), https://www.bankrate.com/home-equity/hidden-costs-of-homeownership-study/

[3] National Conference of State Legislatures, Property Tax Reassessment Policies (2024), https://www.ncsl.org/.

[4] U.S. Department of Housing and Urban Development, Home Maintenance Guidance (2024), https://www.hud.gov/.

[5] HomeAdvisor, True Cost Guide for Home Repairs (2025), https://www.homeadvisor.com/cost/.

[6] Insurance Information Institute, Vacant and Unoccupied Home Insurance Rules (2025), https://www.iii.org/.