My dad is now in a nursing home in Texas. What are the tax implications of selling his house and using the proceeds to pay for his expenses?

[buddhajim]

My dads health took a recent quick decline and is now in a nursing home.   I’ve just turned in the paperwork for medicaid to the business manager at the nursing home.  My dad owns a mobile home and just under an acre of land, valued by the county tax collector at around $46k.  My understanding is that he’s allowed a house and still qualify for medicaid but I was told that I need to cancel his bill pays for all expenses except healthcare, which means I’ll need to pay for the utilities on the house and his cell phone bill, and a credit card debt.  I don’t make a lot of money so may not be able to afford these expenses for long.  

It’s in my dads will that the house goes to me and my step-sister.  I was thinking of selling the house and having the proceeds to go us to make sure my dads wishes are still honored, then use that money to cover his bills.  But I’m not sure of the tax implications.  Also not sure how that would affect his medicaid. 

[fanfare]

First get a full Power of Attorney signed by your father (notarized)

and then you can sell his home and the land.

[buddhajim]

Hi, thank you for the reply.  I do already have Durable PoA and Medical PoA.

[fanfare]

There is no tax on selling a $46,000 home if he lived there at least two years.

It does not even have to be reported on his tax return.

[buddhajim]

Thank you fanfare!  He lived there 30 years so it looks like he qualifies on that point.  That's a big help and relief.  

[Critter-3 · Accepted solution]

Here is the hiccup in your plan ... although he can still own the home if he sells it the proceeds cannot go to you even as a gift due to the Medicaid claw back rules ... talk to the medicaid planner first.