Should I sell my parents' Colorado Springs home, rent it, or keep it after they move?

It depends on what the house needs to do for your parent. If it needs to help pay for care, selling is usually the cleanest choice. If your parent may come back, keeping it can make sense. Renting can build wealth, but it's a business and can make the house harder to sell later. Three timing rules quietly decide many of these choices: the capital gains window after your parent moves out, Medicaid rules if long-term care is likely, and Colorado's senior property tax exemption. Your parent, or their legal agent, makes the call.

Start with who decides

Your parent's house is still your parent's house. If they can make decisions, they decide, and the family's role is to help them think it through. If they can't, the agent under a financial power of attorney that covers real estate, or a court-appointed conservator, acts for them. That person has to act in your parent's interest, which matters if renting or keeping the house would benefit the family more than your parent. See selling a parent's house with a power of attorney, what happens with no power of attorney, and, if brothers and sisters disagree, how siblings can decide.

Start with your parent's goal

I work through these decisions in a specific order: life first, then wealth, then real estate. So the first question is about your parent: what's the goal?

If your parent needs the equity to pay for their care, I think that's a pretty straightforward answer. Sell it, and use price, preparation, and presentation to position the home to sell well.

If they don't need the equity, you may actually have a decision to make, and the next step is to work through the wealth side before deciding about the house.

Wealth isn't only money

The wealth questions I help families explore include:

• Taxes. What would selling now cost compared with selling later, or holding the house? (More on the capital gains window below.)
• Your parent's personal cash flow. What comes in each month, what goes out, and how the house affects both.
• Medicare premiums. A large gain from a sale can raise your parent's Medicare Part B and D premiums, known as IRMAA, which are based on income from two years earlier. See capital gains when you sell a longtime home.
• A mortgage, and what happens if one spouse dies. If there's still a mortgage or other loan on the house, could the surviving spouse afford to keep it on one income? Life insurance or enough savings can cover that gap. If neither is in place, selling may be the more secure choice.
• Homeowners insurance. Understand the deductibles, especially for wind and hail. Some policies use a percentage of the home's insured value rather than a fixed dollar amount, which can make a roof claim far more expensive than expected. See why homeowners insurance varies in Colorado Springs.
• Mental bandwidth and know-how. Wealth isn't only financial. It's also the time, energy, knowledge, and physical ability to take care of a house. When your parent moves to a lower-maintenance place, they're often outsourcing what they no longer have the capability to do themselves. Owning the old house as well can quietly put that burden on you.

Once those questions are answered, the rental and keep decisions usually become much clearer.

Three timing rules that change the answer

These aren't the decision, but they often shape it. Bring them to a CPA and, if long-term care is likely, an elder law attorney before deciding.

The capital gains window

When your parent sells their main home, up to $250,000 of gain ($500,000 for a married couple filing jointly) can generally be excluded if they owned and lived in it for two of the last five years. That means the clock starts once they move out: after about three years away, the exclusion can be lost.

There's a helpful exception. If your parent became physically or mentally unable to care for themselves and lived in the home at least one year of the five, time spent in a licensed care facility, such as a nursing home, counts as living in the home.

If the house is rented first, the exclusion can still apply within that window, but the depreciation taken on the rental can't be excluded. And if your parent keeps the house until death, heirs generally receive a stepped-up basis instead. See capital gains when you sell a longtime home and whether to sell, gift, or leave a home to your children.

Medicaid, if long-term care is likely

Medicaid treats a home differently than cash. In some situations the home doesn't count toward the asset limit, for example when your parent intends to return or a spouse still lives there, up to a home equity limit. The federal baseline limit for 2026 is $752,000, states can set it higher, and a federal $1 million cap takes effect in 2028. Confirm Colorado's current figure. Once the house is sold, the proceeds are cash that can affect eligibility. Rent counts as income. And after your parent's death, Colorado's estate recovery program can seek repayment from the estate, which can include the house. These rules are where an elder law attorney earns their fee. See Medicaid recoveries from Health First Colorado.

The senior property tax exemption in El Paso County

If your parent has Colorado's senior property tax exemption, El Paso County's application says it can continue while they're confined to a hospital, nursing home, or assisted living residence, as long as the house is unoccupied or occupied only by their spouse or a financial dependent. Renting it to someone else, or having another relative move in, doesn't fit that description, so expect the exemption to end. Confirm with the El Paso County Assessor before deciding. See how the senior property tax exemption works.

Option 1: Sell it

Selling usually makes sense when the equity needs to pay for care, no one in the family wants to manage the house, or the capital gains window is closing.

• Price, prepare, present. Position the home to sell: price it from the data, prepare it so buyers see a home instead of projects, and present it well in photos and showings. See how to price a Colorado Springs home.
• It ends the carrying costs: taxes, insurance, utilities, and upkeep on a house no one lives in.
• An empty house is easier to prepare and show. Many families clear the house, decide on belongings, and then list. See whether to hold an estate sale and the steps to downsizing.
• Timing with the move matters. See whether to sell before moving into senior living.
• Speed or return. A cash offer closes faster but usually at a discount; a prepared listing usually nets more if your parent can afford to wait. See what to do with an inherited house for how that trade-off works, and how to spot lowball offers and scams.

Option 2: Rent it out

Renting can turn the house into income, and Kristen and I have kept homes as rentals over the years. But it's a business, and something will break. It's when, not if.

Before renting a parent's home, it's worth working through:

• The full monthly cost against realistic rent, with money set aside for repairs and vacancy. See whether a Colorado Springs home makes a good long-term rental.
• Are you prepared to be a landlord? A rental draws on more than money. It takes time, mental bandwidth, and a tolerance for risk: vacancies, repairs, and tenant issues. If you aren't prepared to manage it yourself, does the house cash flow well enough to pay a property manager? If neither is true, owning the rental taxes your wealth, in the broader sense of your time, energy, and peace of mind as well as your money. Make sure that trade-off fits your life goals and your parent's.
• Getting the house back. Colorado's for-cause eviction law generally requires a qualifying reason, such as selling the home, and advance notice to end a tenancy after the first year. If the plan is to sell in a year or two, a tenant can complicate the timing.
• Insurance. A homeowners policy usually doesn't cover a rental; it needs a landlord policy.
• Authority. If an agent is acting under a power of attorney, confirm the document allows leasing.
• The exit plan. What happens when you're ready to sell it? How old is the roof? Be prepared to replace major systems, such as the roof, furnace, or water heater, while you own it, or to account for them when you sell.
• The trade-offs above: depreciation, the senior exemption, and how rent counts for Medicaid.

Option 3: Keep it

Keeping the house unrented makes sense when your parent may return, or as a short-term hold while the family decides.

• Protect an empty house. Tell the insurance company it's vacant, since many policies limit coverage after a period of vacancy. Keep the heat on through the Colorado Springs winter so pipes don't freeze, and have someone check on it. Sign up for the El Paso County Clerk and Recorder's free Recording Notification Service so you're alerted if a document is recorded against the property.
• Keep the bills current. Confirm property taxes with the El Paso County Treasurer, and keep Colorado Springs Utilities service in place.
• If a family member moves in, put the arrangement in writing: who pays what, whether they pay rent, and for how long. That protects your parent and keeps the peace among siblings.
• Watch the clocks. Holding the house uses up the capital gains window and costs money every month.

If you're unsure, a short hold while you gather answers is a reasonable plan. Set a date to decide, inside the capital gains window.

A simple way to decide

• If the house needs to fund care, consider selling, timed with the move, and position it with price, preparation, and presentation.
• If your parent can still make decisions, it's their choice. Help them explore the tax, cash flow, and Medicare premium consequences.
• If your parent may come back, consider keeping it, and be cautious about renting, since a tenant can affect the exemption, Medicaid, and getting the house back.
• If the family wants a long-term rental, decide whether you're prepared to be a landlord or can afford a property manager, run the numbers, talk with a CPA and elder law attorney first, and make sure the decision serves your parent.
• If you don't know yet, protect the house, gather the facts, and set a decision date.

If your parent is moving somewhere other than Colorado Springs to be near family, I can help you find and personally vet a real estate professional in that market.

What could change the answer

• Your parent's care needs and finances. If the equity has to pay for care, the timeline shortens.
• Whether your parent might return. A possible return favors keeping the house, at least for now.
• Medicaid planning. Selling, renting, or transferring the house can each affect eligibility and estate recovery.
• The capital gains window. About three years after your parent moves out, the exclusion can be lost, with an exception for time in a licensed care facility.
• Who has authority. Your parent, an agent under a power of attorney, or a conservator decides, and each must act in your parent's interest.

When to talk with a professional

Sources

• Internal Revenue Service, Publication 523, Selling Your Home: https://www.irs.gov/publications/p523
• Internal Revenue Service, Publication 551, Basis of Assets: https://www.irs.gov/publications/p551
• Social Security Administration, Premiums: Rules for Higher-Income Beneficiaries (IRMAA): https://www.ssa.gov/benefits/medicare/medicare-premiums.html
• El Paso County Assessor, Senior Property Tax Homestead Exemption Short Form: https://epc-assets.elpasoco.com/wp-content/uploads/sites/4/HE-Short-Form.pdf
• Colorado Division of Property Taxation, Property Tax Exemption for Senior Citizens: https://dpt.colorado.gov/property-tax-exemption-for-senior-citizens-in-colorado
• Justice in Aging, H.R. 1 Imposes New Limit on Home Equity for Medicaid Long-Term Services and Supports: https://justiceinaging.org/hr1-imposes-new-limit-on-home-equity-for-medicaid-ltss-effective-2028/
• Colorado Department of Health Care Policy and Financing, Health First Colorado Recoveries: https://hcpf.colorado.gov/medicaid-recoveries
• Colorado General Assembly, HB24-1098, Prohibiting Residential Evictions Without Cause: https://leg.colorado.gov/bills/hb24-1098
• Pikes Peak Area Council of Governments, Pikes Peak Area Agency on Aging: https://ppacg.org/pikes-peak-area-agency-on-aging/