Should I buy my mother's house, or let her give it to me?

1 answer | Last updated: Oct 05, 2016
A fellow caregiver asked...

my mother wants to give me her house worth about 37000 that has not been lived in for 6 yrs. She is talking about going to nursing home but wants the house in my name first. Should I buy it for a small some or let her give it to me? Can anyone take it from me, if I am living there.


Expert Answers

Barbara Steinberg is the CEO and founder of BLS Eldercare Financial Solutions, which specializes in helping families pay for long-term care for their loved ones. A registered financial gerontologist, she speaks regularly on the topic of paying for long-term care and is a financial expert for Caring.com.

You raise several issues about transferring a house from a parent to a child. I am going to assume that your mother has limited assets and, except for the house, she is eligible for Medicaid. If your mother gives the house to you as a gift, she has made a transfer for which Medicaid will penalize her. The value of the gift is the fair market value of the home, which you indicate is $37,000. To determine the penalty, Medicaid will divide the amount of the gift, $37,000, by the average cost of nursing home care in your state and come up with a number. (You can look up the average cost of care in your state at www.elderlawanswers.com.) Let's say the number is 6. This means, that once your mother has spent down her money to be eligible for Medicaid, Medicaid will delay paying her bills for 6 months. That means 6 months of private pay before Medicaid starts paying. If you buy the house from your mother for any amount less than fair market value, the difference between the fair market value, $37,000, and the amount you pay is considered a gift. The gift will incur a penalty. The only way to avoid the penalty is to pay fair market value. Your mother will need to spend down any money she receives from the sale before she can be approved for Medicaid. If she doesn't sell the house prior to applying for Medicaid, the state can require that the house be placed on the market for sale. You living in the house does not protect it. The only time the house is protected for an adult child is when the adult child lived with the parent in the house for at least two years and cared for the parent for at least two years.