Selling Mom’s home after moving to assisted living
Hi Terry, after hearing you on with John today, I have a question. My Mom moved into assisted living a year ago and she, my brother and I are now in process of selling her home. Is this a bad idea as it will increase her income and in turn her medicare payments? She has enough money (for now) for the assisted living, but she is 91 and her mother lived to 102. Is there something else we can do with the home?
She and my brother live in AZ and I am here in Chicago. I have guilt about my brother (retired, and I am not) having to do the heavy lifting, even though they all lived here and moved away.
Love your sound advice, thank you in advance!
Terry Says
OK, first of all, if her home was her residence for two of the last 5 years (which seems it was), then she can exclude $250,000 of capital gain on the sale. Above that amount, the additional gains are considered income– and yes, they could raise her Medicare Part B and D premiums for a while.
So you need to gather all the records –initial cost of the home, any major improvements along the way. That reduces her gain on sale. I hope that the gain is less than $250,000 when all these things are considered.
And then, when you get the proceeds, put the money in a bank money market deposit account, which should pay at least 3%. This is truly “chicken money” and you should not speculate with it. It would also be a good time to update her will and healthcare power of attorney. And you might want to tile that bank account in joint name, so you will have access to it if you need funds for her care.
