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My 90 year old father owns a 2-family house in NYC with a current market value of around $650k - $700k. I have been living in the apartment upstairs with my boyfriend and his 14 year old son the the past 2 years. I am the primary caregiver and take care of shopping, cooking, cleaning, clothes washing, driving him to doctors, and pay some of the bills, and live upstairs rent free. My brother is not involved with the daily caregiving needs. My dad, except for being old and in declining physical health, is still very sharp and mentally competent.
I own a home about 80 miles away and would like to move there full time in the near future. I have not moved there yet mainly because I did not want to be far away from Dad and he, understandably, has been resistant to leaving his house of the last 50+ years. Now he is talking about possibly selling the house and moving upstate with us and would like to distribute the profit to my brother and I.
He does have a will set up with the house passing on to my brother and I equally. His mortgage is paid off, but there is a line of credit with a balance of $30,000 which we used to make repairs to the house. The house was built by my parents in 1963 for around $30,000. The value of his estate will be under $1 million. His pension, social sec, and withdrawal from investments total around $40,000 a year. He has a LTC policy with limits of $3,000 a month/2 year period/90 day wait and a life insurance policy with face amount of $30,000.
We are conflicted with what to do...any thoughts...advice on whether or not to sell? Pros and cons to either for my father and my brother and I? If we didn't sell, moved and retained as rental, it would generate somewhere between $3,500-$4,000 a month in rental income. However, I would be responsible for handling tenants and would not be living close by...although I guess I could consider hiring a property management company to handle it...

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Thanks for all of your thoughtful, informed responses. I appreciate the time everyone has spent guiding me through this difficult and complicated process. We already are aware of the $14K per year that he may gift to us. Selling the house, the potential capital gains tax, protecting the profit after the sale, the Medicaid issues.....We want to look at all our options and make an informed decision that we are all (especially my father) comfortable and happy with. I've received great advice from everyone here. I am getting a clearer idea of what questions to ask and what we would like to accomplish when we meet with the attorney.
Again, on being a landlord: I definitely have all the same concerns in regards to renting the house out. I used to own 5 rental units when i lived in Maryland, and at one point, had hired a property manager. Although I'm sure their are reputable property management companies, mine was not so much. She wasn't taking care of the properties, yet continued to take her cut every month, so I'm somewhat skeptical based on my own personal experience. I've had good tenants, but as GardenArtist said, when there is a problem, it sometimes is really, really bad and very costly and time consuming. On the pro side, good reasons to have rentals is that the NYC rental market is strong and you can command a higher rent to take care of maintenance and repairs and still make a very nice profit. But, in all honesty, I am not so sure I would be able to handle THIS house like a business. This has been our family home for over 50 years and although it will be sad to sell, I think it would be more difficult, emotionally, if tenants trashed the place. In the end, having had the experience of being a landlord, I don't think the aggravation is worth it, but I will discuss with my brother and get his thoughts.
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Brooklyn1564, if you do plan on renting out your father's home, hire a real estate company that will find qualified tenants and also manage the property for you. There will be a commission fee to the Realtor, and a monthly management fee [example 10% of one month's rent, depending on the average for your area it could be higher or lower]... the property manager will be the go to person for any questions and repairs, thus you won't need to field calls at midnight for a clogged disposal. One advantage having the house as a rental is that any repairs and management fees, and visits by your Dad or you, could be written off on income taxes.

Best thing to do is take a sheet of paper and make two columns, one titled "Pro", one titled "Con", and make a list for staying in NYC, and a sheet for moving upstate. List everything you can think of.
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Brooklyn, I've been thinking over your post as well as the answers, and also have been reviewing my father's estate plan as we need to make some changes. Some of the issues we're addressing reminded me of your queries.

It's occurred to me that your father's situation is complex, especially with the consideration of renting or selling his home and gifting to you and your brother (whether it's all the proceeds or the $14K allowed for gifting in 2014).

You wrote that you're planning to meet with your attorney. I have the sense that you have a good grasp of the issues, but it's difficult to sort out which would contribute to the best plan of action.

You could view this meeting as an exploratory rather than a decision making one, one in which you explore all the ramifications of retaining/renting/selling the house, gifting the proceeds or the $14K to each of you, long distance renting, etc.

Then spend some time discussing the possibilities with your father and brother (which I'm sure you would do anyway.) and if you can, work out a cost-benefit analysis to decide on the best course of action.

I also would raise concerns about long-distance renting. My parents rented out their cottage while they wintered in the south. My sister and I took care of rental issues as well as issues that might arise with my parents' home.

Generally there weren't many rental issues for us to deal with, but the ones that were required either of us to ask for time off work to address them. And one was so serious that I had to resolve it after work in the evening or face frozen pipes and a flooded house, all because of the tenant's irresponsibility. Anyone who lives in an area that freezes would have known better, but he was a tenant, it wasn't his house and he had other plans so he just left.

At that point I said "enough is enough".

Eventually we convinced them to sell the house, which they did.

Good luck!
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As a former long-distance landlord, I would advise against renting the property unless you have family or a trusted friend who would be willing to help you monitor the place. Management companies usually only respond to calls from the tenant or landlord, and don't make regular checks. A bad renter can cause a lot of damage in a short time. If your father is willing to move to live with you, I would advise you to sell the property. It sounds like you have done some recent repairs or upgrades, and the housing market has improved, so the timing may work in your favor.

As for the proceeds, the only thing to worry about is his possible future need for Medicaid. He has long-term care insurance (which would only cover a part of the cost of skilled care, and only for two years), and a fairly good annual income, which would fill in the gaps if he should need assisted living or some home care. If he would need Medicaid within five years of any gift, the money would need to be repaid, or someone would need to cover the cost of his care until the period of ineligibility expired. Others on this site have given some good illustrations about how that is calculated. Igloo is a good resource.

Please read the relevant parts of the tax code at irs.gov to learn about the gift tax. If your father gifts more than $14,000 per year (the current limit) to any one person, he is required to file a gift tax form with his tax return, but no tax is due from him or from the recipient. After his death, if the total value of his remaining estate plus the total value of the taxable gifts exceeds the estate tax exclusion, which is $5,000,000 and indexed for inflation, then the gifts will be subject to estate tax, just as if they were still a part of his estate. The gift tax affects very few people, and from your post, it would appear not to affect your father.

There will, however, be capital gains tax on the sale of the house. This may be a complicated calculation because part of the house is considered to be a rental property. Your father is entitled to exclude up to $250,000 of the gain on a personal residence, provided that he lived in the house at least two years of the five years before the sale, but it would appear that his gain will be between $500,000 and $600,000, depending on the sale price, sales expenses, recent repairs, and his original cost. It would appear that his taxable gain would be around $250,000. For 2013, capital gains tax rates on a home sale range from 0% to 20%, depending on the amount of your father's other income and his marginal tax rate. You can read about this on the irs website to get a rough idea, of how this will work for you, but you will want to have a tax professional do the final calculations.
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Thank you all for your great advice. Countrymouse, the house has one deed and I really could not afford to buy it and do not like the area anymore, nor the noise and congestion in the city. I only purchased the house upstate a year ago, hoping we would all move up there...I lived in a different state for years, sold my house there a few years ago and moved in with dad. It has been more stressful than I realized and I'm trying very hard to simplify things, have a life, and anticipate future problems before they happen. And yes, I am talking with my brother.
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I agree with long distance renting out, that's what I'm worried about too. I was a landlord when I lived in another state, so I have experience with tenants. I am also concerned about his well being, but would very much like to move. There's really no one else around anymore to take care of things. I'm it. Although my brother works in the city, he lives in NJ and only comes over to visit no and then.
I have talked with an Elder Care lawyer and we plan on meeting with him. I get it that selling will be a problem if my dad gifts the full amount to us, but also seems to be a problem if the house sale money is sitting there for future gifting. I just don't know what to do, since I would like to move to my own home. My father depends on me and I just can't leave him here. In terms of healthcare, my house is not far from the city, there is a hospital nearby which is actually within the NYC hospital healthcare system. My dad only has one doctor that he sees, otherwise he is in excellent health, for his age. I'm the one who has a lot of doctors to see. I am a breast cancer survivor, pulmonary problems and am just trying to keep myself healthy and calm and trying to live my life also. I want the best for him and am trying to act in his best interest.
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It's good that you're all thinking about it carefully. If you're reasonably sure about your numbers, then the next step is to think about what's most important to you, both individually and as a family. FF raises some very good points about your father's quality of life, as well as the finances. You also need to think about how his care needs will impact on you as he becomes frailer (may he live for ever, but ...); how would you manage if he became fully dependent on you? What support would be available? This would be a very good time, too, to discuss with your brother what involvement he would like to have in his father's life: perhaps gently remind him that he hasn't got forever to "get round to it."

Your father's assets are substantial, but whether or not they will go that far depends on unknowable factors: as FF says, his money minus his living costs needs to be ring-fenced for his potential care needs. The LTC plan sounds as if it will cover a substantial chunk of those [Pam Stegman?], but you need to look carefully at terms and conditions and especially exclusions and limits under the policy.

The thing is, if he retains the house for its rental income, it is going to complicate matters - cash is an awful lot simpler to add up, keep safe and in due course distribute according to his wishes. On the other hand, an appreciating asset in the city is not to be sneezed at either, especially not as it generates income. Back to the spreadsheets to see which is in your father's best interests, there?

What would you estimate to be the value of your apartment? Would there be any possibility of your buying it from your father, perhaps through the sale of your house? Or are you desperate to get home (I wouldn't blame you)?

There is a lot to ponder, and clearly you are all pondering - well done. The only point to add is to be sure that everyone is candid with one another - avoid anyone thinking they can tolerate a small bugbear in dignified silence, because more often than not it grows like Topsy and they can't. Look at other posts on the forum to spot potential pitfalls: even loving families fall out about ridiculous trivia which in their right minds they'd be ashamed of - so air all reservations, worries and dissatisfactions, don't bottle them up.

And good luck! I hope you find a plan that suits everyone. Please update.
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See an Elder Law attorney who specializes in asset protection. You've gotten some good advice here, but with the assets he has, I would get specific advice on what would be the best route to go.
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NEVER rent from far away. It's like leaving a college fraternity in charge of the house. Sell it and invest it properly so he has a nest egg. NEVER take a distribution prior to his death, the taxes on a gift are astronomical. If he needed Medicaid, they would see the gift and deny all benefits. And forget a trust, in NY they now allow Medicaid to go after a trust. The move will be hard on him, after so long in one place, they tend to decline rapidly.
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First of all, is Dad willing to give up his doctors and his friends, even his barber, to move upstate? Will he find excellent geriatric medical care in his new location? Is there a hospital with a trauma ER nearby? If for some reason he needs to be placed in an independent living or assistant living, how many choices of places will he have in the new location compared to NYC, so that you can visit him?

As for distributing the profit from the sale of the house, your Dad should put aside that money for himself to use if he has to go into an independent or assistant living. Since your Dad is quite healthy, he might live another 5 to 10 years, if not longer. He needs those funds.

I would also recommend that he consult an Elder Law attorney to talk about putting that money into a living will/trust.
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