I read this section of the code. While my parents had an implied interest (with us, their children) that the property would confer upon death and that they would live in it until unable or at death, I don't know how that is proven since not documented. In reality it happened so that may be enough. Technically we could have sold it at any time after Aug 08 when they deeded it to us (without an official life estate rider) My other concern would be that my dad qualified for Medicaid the last month of his life and it was documented that he had no house since 2008. He did not have to pay back anything as a result of his remaining estate being valued at under $25,000. I certainly want to believe that we can step the basis up to the time of his (went into a nursing home on 29 April 22) passing on 31 May 22 and subsequently selling the property on 29 July 22. The stepped up basis would be the sale price so their would be no capital gains. It seems like we are playing both sides against the middle. For IRS purposes it is an implied life estate but for Medicaid purposes he technically did not have a house in the last 5 years that they could come back on to pay back expenses. I don't want to get sideways with the IRS in a loose interpretation. Thanks for all your inputs. I am still looking for a good local tax attorney also. Keep the responses coming.
