Prepare for tax implications if your parent gives up ownership rights to their home and moves into a nursing home or assisted living facility. This is an option for people who can't afford senior living, but it is not widely used. Most caregivers and elders aren't impacted by this arrangement.

Although it's a little untraditional, when it is used, the transaction is considered a sale of a home, according to the IRS.

The transfer of the home to the assisted living facility falls under the same tax rules as anyone who sells their home, says Ted Sarenski, a CPA and certified financial planner in Syracuse, N.Y. For caregivers, there is more to the situation, which you need to be aware of when filing taxes.

Your parent or family member needs to meet the IRS' ownership and use requirement. An elderly individual or a couple needs to have owned the home and used it as their principal residence at least two of the last five years before the date of sale.

If they have met those requirements, an individual qualifies for up to a $250,000 gain (or up to $500,000 for a married couple) on income taxes, under the IRS' home sale exclusion.

Sometimes, before parents go into an assisted living facility, they are being cared for at a caregiver's residence. If the individual or couple has not lived in the home for two of the last five years, that would limit any gains on income taxes, says Sarenski, president and CEO of BOSC (Blue Ocean Strategic Capital) and a member of the American Institute of CPAs.

There's another thing to consider: Your parent or family member can try to protect the home from being an asset (when moving into an assisted living facility) by transferring home ownership to you or putting it in a trust, at least five years before entering an assisted living facility.

If the home then sells, and if you are the child who the home was transferred to, it would have tax consequences for you. Sarenski says the net from the sale would go to kids and grandkids – not the assisted living facility. The sale would be an asset subject to capital gains tax, not qualifying for the personal residence sale exclusion on your taxes.

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