Can my mom sell her house to me for a Dollar?

[mwthompson]

I live in PA my mom lives in FL.

She wants to sell her house to us for a dollar. I recently heard of some senators doing this here in PA with family members. Is this legal?

Also I would like to know if there is a limit to how much money she can give us. She is trying to reduce her assets so she can qualify for a senior apartment plus she wants to reduce the hassle we might have upon her death.

Thanks.

 

[BRN2005]

$1.00 House

Yes, she can sell her house to you for a dollar. However, if she is only doing this to reduce her assets, you may want to check on the laws with regards to her doing this. You may find she cannot do a deliberate reduction of her assets just to qualify for assistance. Sometimes, in certain situations, they do not allow them to deliberately deflate their estate value within certain time periods prior to application for assistance, etc. I do not know this to be the case in your situation, I am just saying, "Check".
I have not been in the business for a while, but with estate planning, you are allowed to gift a set dollar amount per year to each of any number of heirs, without penalty. It used to be $10,000, but I am not sure any more if that figure is still good. Again, "Check".

 

[acmb05]

Yes, she can sell her house to you for a dollar. However, if she is only doing this to reduce her assets, you may want to check on the laws with regards to her doing this. You may find she cannot do a deliberate reduction of her assets just to qualify for assistance. Sometimes, in certain situations, they do not allow them to deliberately deflate their estate value within certain time periods prior to application for assistance, etc. I do not know this to be the case in your situation, I am just saying, "Check".
I have not been in the business for a while, but with estate planning, you are allowed to gift a set dollar amount per year to each of any number of heirs, without penalty. It used to be $10,000, but I am not sure any more if that figure is still good. Again, "Check".

It still is but only for her children, not for any other heirs she may have.

 

[Ohiogal]

I live in PA my mom lives in FL.

She wants to sell her house to us for a dollar. I recently heard of some senators doing this here in PA with family members. Is this legal?

Also I would like to know if there is a limit to how much money she can give us. She is trying to reduce her assets so she can qualify for a senior apartment plus she wants to reduce the hassle we might have upon her death.

Thanks.

By her doing this she may get in trouble for fraud. Many times such agencies check back a number of years and not go with just the present amount of assets. They will be looking for a deliberate spend down.

 

[Gadfly]

You need to determine if she owns the house "free and clear." If there are any encumerances they may go with the property and become yours.

 

[mtpockets]

Tax problems down the road

If she sells her house to you for a dollar, then your cost basis will be a dollar. When you later sell the house, you will have to pay capital gains tax on the full selling price, net of selling expenses.

If she gives the house to you, your cost basis will be her cost basis (unless the property has depreciated).

Either way, you will probably run into some of the problems mentioned by previous posters.

If you inherit the house, your tax basis will be the fair market value at the date of your mother's death, and there will be no capital gains tax if you choose to immediately sell it.

 

[Ohiogal]

You need to determine if she owns the house "free and clear." If there are any encumerances they may go with the property and become yours.

To add to this -- if the home has a mortgage on it, it may immediately become due in full upon transfer to you from her.

 

[BelizeBreeze]

I live in PA my mom lives in FL.

She wants to sell her house to us for a dollar. I recently heard of some senators doing this here in PA with family members. Is this legal?

Also I would like to know if there is a limit to how much money she can give us. She is trying to reduce her assets so she can qualify for a senior apartment plus she wants to reduce the hassle we might have upon her death.

Thanks.

Let's not beat around the bush. If the assisted living senior apartments are subsidized by the U.S. Government mom is contemplating fraud.

Ever hear of prison?

 

[anteater]

If she sells her house to you for a dollar, then your cost basis will be a dollar. When you later sell the house, you will have to pay capital gains tax on the full selling price, net of selling expenses.

No, it won't. The IRS will laugh its way right on past this $1 jive and treat the transaction as what it is -- a gift.

 

[nextwife]

No, it won't. The IRS will laugh its way right on past this $1 jive and treat the transaction as what it is -- a gift.

There is a five year "lookback" period to determine if assets were transfered in anticipation of utilization of assistance. I believe I heard that may be lengthened. So if mom's care needs won't be for many years, then the lookback will not apply. See, Mom can gift it to you ten or twenty years prior to needing housing help from the government. And in that case it is simply a gift.

But if it is done within a certain timeframe, it is seen as deliberately divesting assets that one COULD have used to pay for their own housing/assistance.