If we sell the home before she passes away, is she required to pay tax on the sale of the home and will she lose certain benefits such as Medicare?

Wow. No inheritance tax. However, I am not sure what you want to do with mother. Is she living there? If so, maybe a conveyance to the three children and she keeps a life estate. She would not lose benefits from Medicare. You do not get an inheritance until someone to whom you are an heir dies. If she gives you the money it is a gift, maybe subject to a gift tax. What is wrong with getting an attorney involved. Trying to do this on your own may cause a messy situation. Do the three children take the property as tenants in common, joint tenants, etc. What happens to your mother. if she sells the home. Does she move in with you? Does she want to move in with her children? The best route is why you should hire an attorney.

California does not have inheritance tax. If mom sells now, she may have a capital gain on which to pay tax. If, however, you inherit the property, you get a stepped up basis; the value on the date of death. That benefit may be offset by the cost of probate, so she is a candidate for a trust, to avoid probate.

Sale of the home will result in a taxable event. Income tax will be due on the capital gain, however, there is a large exclusion if the gain relates to the taxpayer's principal residence. The exclusion is $250,000 for a single person, $500,000 for a married couple. There are some other factors that bear on availability of the exclusion but it is likely that your mother qualifies. If you sell the property after your mother passes, the basis in the property is grossed up as of her date of death and there is not likely to be any capital gain on a sale after her death. Any distribution from your mother's assets prior to her death would qualify as a gift. There is an annual exclusion from the federal estate and gift tax for gifts in the amount of $14,000.00. Gifts in excess of that amount may be taxable under the federal and state estate and gift taxes. Since the home is the primary asset in your mother's estate the value of the estate is not likely to be subjected to the estate and gift tax. Estate and gift taxes (inheritance taxes) should not have any impact on your decisions. Gifting your mother's assets prior to death will affect her eligibility for Medicaid. Medicaid looks back 60 months to determine if assets were given away and if so, eligibility for Medicaid assistance will be delayed to the extent the gifted assets could have been used to pay for the services normally paid by Medicaid. Outside or family resources would have to be used to support your mother during this "make up" period before she becomes eligible for Medicaid. Medicare, on the other hand, is a health insurance program and is not affected by your mother's assets. Gifting her assets before her death can greatly affect her care plan and eligibility for services.

First, is your mom living there or in assisted living? Are you going to kick her out? If you do sell it now, she may have a capital gains tax to pay. However, it is also entirely possible that she may claim an exemption from paying the taxes. There is also a possibility that she may have to pay gift taxes on the payments to you. However, you should consult with a tax accountant because the tax may be avoidable or not applicable in this situation. However, you may want to consider leaving the property in mom's name so that when she dies, the property will be passed on with a stepped up basis. In other words, assume it is worth $500,000 but she only paid $200,000. That is a profit of $300,000 on which tax may be due. If she dies and the property goes to the three of you and you sell it for $500,000, there is no tax due because the basis in the house will be increased to $500,000 on her death. So, the best advice is to talk with a tax accountant and a local estate planning attorney to figure out the way to proceed.

First of all, (and I don't mean to be rude, but you need to keep this front and center in your mind) it's your mother's house, and the proceeds of sale are hers. It's not your inheritance until she passes away. At 91, your mother may need all of her assets to pay for her care, so, in general, it's not a good idea for a 91-year-old to give away assets, unless they are excess she's rich, and couldn't possibly need them. There are many questions to look at is she still living at home? Is that safe? Does she need caregivers to help her? Does she need to go to a facility? Medicare is not the issue. Medicaid is the issue. If your mother needs long term care and can't afford it, she will need Medicaid. Any gifts will disqualify her from Medicaid, so don't do it. If she has lived in the home for two years, she can sell it and exclude up to $250,000 in capital gain from tax. Oregon's estate tax kicks in at $1,000,000 of property, the federal not until $5,000,000. You should hire a lawyer experienced in elder law to help with this planning. A few hundred dollars spent on planning will save thousands later.

First, the home is not yours to sell; only your mother's. Secondly, the value of the asset is for her care and not yours; medicare and or medi-cal may have a claim on the asset if they have advanced funds to pay for her medical care. Lastly, the transfer at such a late date would be suspect as to whether your mother would understand what she was agreeing to, and whether a asset transfer is an attempt to avoid what the taxpayer has provided, since it is so late in the game. Neither you or your siblings are entitled to an inheritance. If you want to proceed further, you are advised to seek the services of a estate planning lawyer who can explain to you any tax ramification on the gain in value of the property during the course of your mother's holding of the asset.

There are very strict and complicated rules for assets under Medicaid, which you need to consider if she is considering using it for a rest home. There are also federal and state inheritance tax rules you need to consider. Without knowing more facts, my general advice would be to have your mother set up a trust and transfer the house to the trust to avoid probate. She can give a certain amount per year under the gift tax rules prior to her death. I suggest that you contact a good estate planning lawyer to minimize taxes and probate issues.

Yours is not an easy question to answer in 50 words or less. It deals with an enormously complex area of law. Your mother should not sell the house without consulting with an attorney. If she does, all of the proceeds would need to be spent down before she would qualify for Medicaid. (Medicare is not affected by finances.) Medicaid is a welfare program and she would not qualify for benefits. If she divests the home or its proceeds, she would not qualify for benefits. More than 5 years needs to pass from the date of divestment, before the funds would not be considered part of your mother's assets.

If she sells the house before she dies, she will need to inform Medicare of the new income. In addition, she is only permitted to gift $14,000 to each sibling in one year. Anything above that amount is taxed. It is best to wait until she is deceased to sell the house. The distribution is taxed free.

Contact a Medicaid/Medicare/elder law attorney and get personal estate planning advise immediately. It is my understanding that Medicaid has a 60 month look-back.

I am assuming your mother's net worth is less than $5.25 million. If she sells and has a profit of more than $250,000, she will need to pay tax on the excess. If she dies and leaves you the home you will have no tax; in fact you will get some deductible loss, for the commission and other sale expenses. If she gives anyone more than $14,000 in a single calendar year she must file a gift tax return, though no tax would be due. If she sells it or gives it away, then she likely will lose Medi-Cal, but not Medicare. No matter what, no inheritance tax and no estate tax. Consult a lawyer.

Get to an estate planning/probate lawyer for advice. The sale of the home will not affect Medicare, but could affect Medicaid if she later needs that assistance.

Contact your local Social Security office for information about your mother's situation. If she is not receiving any other federal benefits, she should be able to sell the house and keep the profits. She will have to pay taxes on the sale. Your mother can gift each of you several thousand dollars each year without you being required to pay any taxes. You would only have to pay inheritance tax after she passes away.

Selling the house and distributing the proceeds would not have any effect on your mother's Medicare, and there would be no inheritance taxes to be paid. Since it is her residence, there should be no capital gains tax either. The problem that could come up is if your mother needs to go into a nursing home and applies for Medicaid assistance. The sale of her home could effect her eligibility for that program.