Selling Home: Medicaid & Tax Implications
Update: 2025-12-02
Description
The podcast episode delves into a complex family situation involving a brother selling his home to his sister due to declining health and financial struggles. The sister plans to let him live there rent-free, but the arrangement raises questions about the houses status as an asset or rental property. The main concerns are Medicaid implications and potential tax issues. If the brother sells the house below its fair market value or continues to live rent-free, it could lead to a penalty period, making him ineligible for Medicaid long-term care benefits. Additionally, the sister buying the house could result in the loss of the step-up in basis tax break, potentially costing the heirs thousands of dollars. The family is advised to consult with an elder-law attorney to navigate these complex legal and financial implications.
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