If she is already in a NH and Medicaid is on the horizon, there really isn’t any time to be at all creative with her financials. What Glad posted regarding Medicaid is super important as transfer penalty are done by Medicaid and you do not want to have that ever be an issue.
However that doesn’t mean you cannot try to buy her home at the best price that will be totally legit for any scrutiny by a Medicaid caseworker. Heres my suggestions: - find her last tax assessor/ collector bill. It will state their value of her property for both land & improvements (house). This is the baseline that Medicaid will want it sold at. Is this figure accurate?
If assessor value makes sense, then that’s the FMV you buy it for. Medicaid will want it such that mom is paid in full (no mo agreement between you & mom to buy). So you will need to either do all cash sale w contract done by Real estate atty or get a mortgage. Mom uses the $ to private pay for her care, she cannot gift 🎁 any $ to anyone.
BUT I’m going to guess tax assessor value is not accurate. That moms house has decades of delayed maintenance, it’s an old house filled w old stuff & not sellable at tax assessor value. It’s not granite countertops and rainfall showerheads and current code for electric, lol.
IF this is it, then what has happened is…. assessor values are based on “comps” (comparables) which are recent sales for an area, census tact, zip code. If home is in a neighborhood with lots of flips, tear down/new builds, home may be not at all comparable to recent sales.
I’m going to guess it is and it really hasn’t affected mom cause Elders have all sorts of tax exemptions or decreases due to age, disability. Or taxes are frozen. Taxes have stayed low for years but value has gone up. Even tho mom hasn’t done any renovations or upgrades. Her homes value has increased due to comps. Mom hasn’t been bothered by the wildly increased value of her old decades of delayed maintenance home as moms taxes are fixed/low. Reality is moms house really isn’t worth increased $$$ value tax assessor has it at. Often value has been increasing every year for years; mom has never challenged annual assessment. But assessor value going to make a huge, HUGE a$$$ difference for you to buy it.
If this is at all your situation…. that tax assessor figure is whack…. then my suggestions are your mom needs to have her property inspected and then appraised (appraiser gets the inspection report) so that there is a fresh legal document with photos and details that is used to establish a more accurate & legitimate value of her property. If her foundation is really bad, might need residential engineer report. All these are legal documents with state license # and probably a seal as well. This appraisal value is the new legitimate property value. & what it can be sold at. Even if it’s way w…a….y less.
As it is her asset - her home in her name - so your mom needs to be the one to do this, but she can have someone else set this up on her behalf. You really should not as you are the potential buyer…. It looks like “self dealing’ if you were to do this. Ditto if you are also your moms POA.
Right now in a lot of areas there is low inventory on homes. So prices high. Drives up comps big time. Old unrenovated kinda POS homes overvalued. Nothing wrong with mom & you doing whatever to get accurate value on the property. & you base your decision on the new appraisal. Good luck.
Igloo, if her Mom currently qualifies for Medicaid due to no assets and little income, might not the sale of this home to ANYONE at this time give Mom assets enough NOT to qualify for Medicaid, hence all this money from home going to her care alone? Just curious, and wondering if this would make a difference to OP and the Mom?
See an Elder Law Attorney or Trust and Estate Attorney in your state. This is unlikely to be a good path forward. Unless you pay full market price for the home this would be considered "gifting" by your mother, and she would be forbidden Medicaid. Also, if you do pay full market price this money is an asset for your mother that is not exempt. I hope that Igloo is about on the Forum today and can give you some good advice, but it is my personal opinion that this is a very bad idea. Do know that the more details you can give us, the more information you will get. Also know that many questions are questions for trained professional. Following the advice of caregivers on any Forum may lead to disasterous mistakes for both you and your Mom.
To determine fair market value, I would use a licensed appraiser, and perhaps get two appraisals. Then, if you need to document when it comes time to do the Medicaid application you can honestly say that you paid FMV based on the appraisals. Appraisals take into account both recent sales of comparable properties and also the condition of the house. The cost of the appraisal would be paid by the seller, i.e. your mom. Because it would be a direct sale, you would not need to pay a real estate broker commission but you should use a good lawyer to handle the transaction, which would also be paid by your mom. If you need to take out a mortgage to pay your mom, the lending institution will also have an appraisal done. Any money your mom receives from the sale will need to be "spent down" on her care before you do the Medicaid application.
You have to buy it for fair market value. Otherwise the difference between what is paid and FMV is considered a gift. Mom will be penalized dollar for dollar on the difference where she will not be eligible for Medicaid.
However that doesn’t mean you cannot try to buy her home at the best price that will be totally legit for any scrutiny by a Medicaid caseworker.
Heres my suggestions:
- find her last tax assessor/ collector bill. It will state their value of her property for both land & improvements (house). This is the baseline that Medicaid will want it sold at. Is this figure accurate?
If assessor value makes sense, then that’s the FMV you buy it for. Medicaid will want it such that mom is paid in full (no mo agreement between you & mom to buy). So you will need to either do all cash sale w contract done by Real estate atty or get a mortgage. Mom uses the $ to private pay for her care, she cannot gift 🎁 any $ to anyone.
BUT I’m going to guess tax assessor value is not accurate. That moms house has decades of delayed maintenance, it’s an old house filled w old stuff & not sellable at tax assessor value. It’s not granite countertops and rainfall showerheads and current code for electric, lol.
IF this is it, then what has happened is…. assessor values are based on “comps” (comparables) which are recent sales for an area, census tact, zip code. If home is in a neighborhood with lots of flips, tear down/new builds, home may be not at all comparable to recent sales.
I’m going to guess it is and it really hasn’t affected mom cause Elders have all sorts of tax exemptions or decreases due to age, disability. Or taxes are frozen. Taxes have stayed low for years but value has gone up. Even tho mom hasn’t done any renovations or upgrades. Her homes value has increased due to comps. Mom hasn’t been bothered by the wildly increased value of her old decades of delayed maintenance home as moms taxes are fixed/low. Reality is moms house really isn’t worth increased $$$ value tax assessor has it at. Often value has been increasing every year for years; mom has never challenged annual assessment. But assessor value going to make a huge, HUGE a$$$ difference for you to buy it.
If this is at all your situation…. that tax assessor figure is whack…. then my suggestions are your mom needs to have her property inspected and then appraised (appraiser gets the inspection report) so that there is a fresh legal document with photos and details that is used to establish a more accurate & legitimate value of her property. If her foundation is really bad, might need residential engineer report. All these are legal documents with state license # and probably a seal as well. This appraisal value is the new legitimate property value. & what it can be sold at. Even if it’s way w…a….y less.
As it is her asset - her home in her name - so your mom needs to be the one to do this, but she can have someone else set this up on her behalf. You really should not as you are the potential buyer…. It looks like “self dealing’ if you were to do this. Ditto if you are also your moms POA.
Right now in a lot of areas there is low inventory on homes. So prices high. Drives up comps big time. Old unrenovated kinda POS homes overvalued. Nothing wrong with mom & you doing whatever to get accurate value on the property. & you base your decision on the new appraisal. Good luck.
Do know that the more details you can give us, the more information you will get. Also know that many questions are questions for trained professional. Following the advice of caregivers on any Forum may lead to disasterous mistakes for both you and your Mom.