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Maw1935 - other considerations are the long term costs on the house; it's value for a possible future sale; & what moms finances are likely to be commmited to in the near & far term. Really try to take the time to put pencil to paper and review all the costs on the house, her AL, etc for 2016 and look at her awards letters from SS, retirement, pensions for 2017 and any investment EOY 2016 statements to see just what funds she has & she will need.

If she has substantial assets today for her care & the property and the likihood of needing Medicaid is non-existent, then keeping the house till beyond death so it is inherited is a better strategy. This is what Pam refers to with $00 basis. But is mom is going to need Medicaid although the house usually can be kept as an exempt asset for Medicaid, mom will have no $ to pay on ANY costs as she will be required to have her monthly income almost all paid to the facility as her co-pay or share of cost (SOC) under Medicaid. So although mom owns the property, family will have to pay all costs on the house either from their own wallet or renting it from day 1 of medicaid till beyond death and then deal with however Medicaid estate recovery (MERP) runs for your state & open probate after she dies.

Keeping the house can be done. But based on posts on this site, most families that end up needing Medicaid, place the house on the market within the first 6 mos as family just runs out of $$ & "nice" as there is dissension within family on paying for stuff or keeping their end up. Really if Medicaid may be needed think about the "what if's" before the costs on the house get too loco to work. Selling the home often provides enough $$ to enable them to private pay for care so there are ooodles more choices of facilities.
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If it is her house, she sells it and pays no capital gains. If she is a life tenant but the house is in your name, you sell it and she is entitled to part of the proceeds due to life tenant rights. You pay capital gains on the rest because your basis is $00. On the other hand, if you wait until she passes, you inherit the house (probably not taxable) and you sell it. Your basis is the market value of the house on the day she died, so it could be a gain or a loss.
Now go talk to your lawyer and your accountant for the details.
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I'm not sure I understand your question. Where does capital gains tax come into the equation?
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