Buying Mother's House

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Topic Author
fufgirl
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Joined: Thu Sep 20, 2018 8:39 am

Buying Mother's House

Post by fufgirl » Sat Aug 01, 2020 12:54 pm

Hello and thank you all! For the last few years I have debated buying my mother's home. I would like any advice (believe me, I know there are plenty of potential hangups given her situation) on doing so. I would likely not move on this until early or middle of 2021. I am hoping to hear from others who either have done something similar or found out all the ways it's just not a great idea:

I am 31, mother is turning 60 early next year. House is worth barely over 100k according to Zillow, and according to tax assessments could easily be worth only 100k. I would absolutely only buy at FMV. Also, I am her only child.

Moving into her house and buying it as owner-occupied. (I have my own home which is NOT far enough away to be a vacation home). The caveat is that I WOULD eventually (past the required occupancy period officially move out and rent to her) which I think could look not ok..I would then leave my home unoccupied and report this to homeowner's insurance. I would of course still tend to it but I would NOT be living there or renting it.

Or, I could buy her house as an investment and immediately rent to her at market rate or at no less than 25% of market rate (or whatever I read was acceptable by the IRS for family). Please assume that qualifying for the mortgage either way does not present any problem.

Please assume for the sake of this situation also, that there is absolutely no concern about my financial ability to pay for the house and any other necessities, however irritating they could be whether or not she paid rent as I have built up quite the amount of assets. I have already done so during the 3 year period in which she would eventually receive disability, as well as making the payments on my own with no significant adverse financial effects to myself. Also, this is no concern about her paying rent either, as being somewhat "low-income" myself, I managed to excessively save in retirement accounts the entire time I was supporting the 2 housing payments/upkeep.

Major pitfalls:

She is on SSDI thankfully, not ssi, so there would be no affect on her monthly payment directly as a result of her receiving the proceeds from the sale. However, her SSDI amount is very much on the low end, allowing her to qualify for benefit programs such as heating/cooling assistance, foodstamps, and most importantly, Medicaid.

She also has Medicare part B which is currently being paid for by Medicaid (with much fight, I may add...). She would not lose MediCARE, but she would cease to be eligible for Medicaid and the other supplement programs when she sells the house. She would also start having to pay for Medicare herself. The supplement programs she would be able to receive again once she spent the assets, but I am unsure about the MediCAID part. 

Again, she SHOULD be able to apply again, but I do not know if this "5 year lookback" period is going to  keep her from having "little Medicaid" which I am defining as anything but a nursing home or in home care within 5 years from the sale. It may be she can get "little medicaid" after 2 years from the sale, but the nursing home part would be what would not be allowed at that time until the 5 year lookback elapsed. Please assume that a nursing home is out of the question also. I am in a position where, again while irritating, I could take many years off of ANY work to care for her if necessary, and I frankly don't view 5 years as a ridiculous length of time.

Her health is not stellar and I am not a doctor but I would not expect her to "rapidly decline" to the point of not being able to have any degree of independence until the late 60s at the absolute earliest. Again as well, she has already been on Medicaid the last nearly 5 years, so I am concerned the clock has already run out on this as she has already received "later in life" Medicaid. I am not sure if this automatically makes her subject to a Medicaid lien (she does not have one on anything now, so I do not know if she could just report she was over the asset limit barely etc (she is not at the moment) and get kicked off Medicaid prior to any closing of the house).

I apologize for the length, and thank you again for your responses and advice.
Last edited by fufgirl on Sat Aug 01, 2020 1:10 pm, edited 1 time in total.

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BolderBoy
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Re: Buying Mother's House

Post by BolderBoy » Sat Aug 01, 2020 1:04 pm

fufgirl wrote:
Sat Aug 01, 2020 12:54 pm
Please assume for the sake of this situation also, that there is absolutely no concern about my financial ability to pay for the house and any other necessities, however irritating they could be whether or not she paid rent as I have built up quite the amount of assets.
You seem to have thought this out pretty carefully.

The waters you plan to travel can be shark infested, as you apparently know. I would suggest, since you have the assets, that you spend the extra $$$ required to visit a lawyer who is experienced in this area just to be sure you haven't overlooked a trap.

In the big scheme of things it could be money well spent.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

Cigarman
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Re: Buying Mother's House

Post by Cigarman » Sat Aug 01, 2020 1:04 pm

I just went through something similar with a MIL and an inheritance. I spent a couple hundred dollars talking to an elder care attorney about the do's and don'ts to avoid losing housing assistance, Medicare, SNAP, etc. My MIL is currently living in government assisted housing (she is in Indiana, I am in NC.) So, if you haven't already, you and your mother together should consult an elder care attorney in the state in which she resides.

delamer
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Re: Buying Mother's House

Post by delamer » Sat Aug 01, 2020 1:06 pm

I suggest you add some “white space” to your post. It’s long and difficult to read as currently formatted.

Use the little pencil at the upper right to edit.

I believe you’ll get more responses if you do so.

ralph124cf
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Re: Buying Mother's House

Post by ralph124cf » Sat Aug 01, 2020 1:08 pm

What, exactly, are your goals from this plan?

Ralph

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CAsage
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Re: Buying Mother's House

Post by CAsage » Sat Aug 01, 2020 1:09 pm

I might be slow, but what problem are you trying to solve here? If Mom keeps her house, one presumes you will eventually inherit it, and you are in a position to help her with long term care, or other expenses... Both houses will appreciate the same whoever owns them. Do you want the mortgage write off or ?????
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

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auntie
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Re: Buying Mother's House

Post by auntie » Sat Aug 01, 2020 1:11 pm

Why do you want to do this?
High risk does not equal high reward. It equals high risk of no reward.

Topic Author
fufgirl
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Re: Buying Mother's House

Post by fufgirl » Sat Aug 01, 2020 1:26 pm

I know, and this is the dilemma. It seems like I should just "leave well enough alone" here. However, I do think the house has the potential to easily be worth 200/250k in 20-30 years. I don't want this being seized for any reason down the line, of course, if I can avoid it. The problem keeps coming up is that I really don't know what I don't know, and they can, as far as I know change lookback rules on a whim and do it retroactively also. So, I don't hardly know how to make sure its all above board now, let alone how to do so under rules that could be down the line--basically there could be more sharks in the water than I can see right now!

The house does need things done to it and will even more as time goes on. I have gotten a great deal of work done for free on it (thus saving me quite the amount of $$$ that I would probably be having to spend already) or practically no cost due to her income already. It would be nice if, I am to be "responsible" for these things that I receive some benefit for doing so also, including repair/depreciation expenses as I rent to her, and have it "safely" in my name well in advance of even some doubling of the "new and improved(ha)" lookback period...

Also it is by no means a done deal, but her home is in a better school district and if I were to have a child then I believe they could go to the better school district. I know plenty of people do this already with relatives, which is not allowed, but I would actually own the house. The alternative fantasy is that somehow she would be able to eventually get Section 8 and that would help both of us, and yes she could IN THEORY because she is disabled, but I by no means can allow myself to expect that. I would imagine having her grandchild live there for school purposes and live there would not go well anyway if combined with Section 8. A kind of having cake and eating it situation...

I probably do need to find a good lawyer and spend the money. I have in the past used the legal plan through my work and not had good experiences. I would not have even bought my house over half a decade ago had I listened to the lawyer who all but told me, in the nicest way possible that basically home ownership is a lot for a single woman...and basically tried to dissuade me despite my "evidence" to the contrary..lol. That being said, a lawyer did end up getting mom her disability but they even acted like they were shocked that it was successful!

clip651
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Re: Buying Mother's House

Post by clip651 » Sat Aug 01, 2020 2:08 pm

You need legal advice, for sure, for what you are considering. It sounds like you want to protect the house from medicaid (even after she dies), while letting her live there as long as she is able. You need legal advice to see if this is possible, and how.

What does your mother want? She needs legal advice too, if you are to pursue this.

Side question - if not for the issue with your mother, would you be looking to buy a second house? I think you can safely wait to worry about school districts until you have a child in your arms.

best wishes,
cj

MJS
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Re: Buying Mother's House

Post by MJS » Sat Aug 01, 2020 2:28 pm

Ask your local elder law expert about purchasing a Medicaid compliant SPIA annuity with some/most of the profits from the home sale. It would reduce her assets but provide lifetime income. She is very young for a SPIA, of course.
https://www.medicaidplanningassistance. ... y-annuity/

muddlehead
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Re: Buying Mother's House

Post by muddlehead » Sat Aug 01, 2020 6:34 pm

Whenever anyone says this:

"It seems like I should just leave well enough alone here."

You've kinda answered you own question right there.

Topic Author
fufgirl
Posts: 15
Joined: Thu Sep 20, 2018 8:39 am

Re: Buying Mother's House

Post by fufgirl » Sat Aug 01, 2020 7:02 pm

Yeah...I think I'll just stimulate the economy and buy a new truck instead (only ever had 20+ year old vehicles) lol. Thanks everyone!

jmw
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Re: Buying Mother's House

Post by jmw » Sat Aug 01, 2020 7:16 pm

You made the *right* decision already but just wanted to add my data point: My parent's creditors via the chapter 7 bankruptcy trustee were nearly able to pierce the purchase of my parent's property from me four years after the transaction.

Topic Author
fufgirl
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Joined: Thu Sep 20, 2018 8:39 am

Re: Buying Mother's House

Post by fufgirl » Sat Aug 01, 2020 7:25 pm

Yes...that is my concern also. I've read they can go back even 10 years for bankruptcy in those circumstances...glad it worked out for you but that possibility must have been a nightmare.

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Sandtrap
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Re: Buying Mother's House

Post by Sandtrap » Sat Aug 01, 2020 7:38 pm

Seek Legal Counsel asap.

Concerns:
What if this transfer takes place and then you die before your mom?
What if your mom gives you the property and you take care of things thereafter, but then you die first?
Why not have your mom give you the property, sell your property, and with the combined proceeds buy a larger home for both of you to live in and you pay the expenses and she contribute as she can?

j :happy
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Topic Author
fufgirl
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Joined: Thu Sep 20, 2018 8:39 am

Re: Buying Mother's House

Post by fufgirl » Sat Aug 01, 2020 7:51 pm

She would of course have gotten the house back along with my retirement accounts etc. so either way that wouldn't mean much for her (financially) if I died before her. She has actually said she should just sell period and I get something else but unfortunately even selling to a third party still leaves the issue of her being off of public assistance at least for a time and the headache that goes along with that.(has to report sale and the duh...money).

She could in theory sell and buy something else herself, but there is literally no way she would qualify for a mortgage of any amount anymore.--- It wouldn't make sense for us to buy a house together legally or have her name on it because there would still be the same problems. Like the poster above noted though, there are issues that come with selling the home to the related person as I don't think its viewed as a-ok. She doesn't like the idea of me not getting the house either, but perhaps it will be too little for them to worry about at that time, or at the very least not enough for me to worry about that far away.---I should say though....as I wrote the above she may be able to sell and turn the equity into a new home bought for cash within the month/60 days...she sells for FMV elsewhere and viola! no more house payment...now THAT is an interesting prospect...and I am left out of it! I knew posting here was a good thing! Then if they were to take it down the line, the "bleeding" stopped long prior. Without the need for a "good/better" (I do believe my area is very up and coming given the school rate hikes...:/) school district there is little point.

She has gotten a property tax credit each year since she was , but she could pay like half the amount in property tax and STILL get the full credit!!! I will do more research on this end but the point is that she didn't have a bunch of disqualifying money in her account for long and turned it into a new place to live...just that she stopped having to make payments.

clip651
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Joined: Thu Oct 02, 2014 11:02 am

Re: Buying Mother's House

Post by clip651 » Sat Aug 01, 2020 10:38 pm

So - your most recent post sounds like a more suitable plan for her - if she were to sell current place, and get smaller more manageable place with the proceeds. But nonetheless, she needs legal advice. Don't try to wing this and hope it all works out.

BarbBrooklyn
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Re: Buying Mother's House

Post by BarbBrooklyn » Sun Aug 02, 2020 4:33 am

Just to clarify your terms:

"LITTLE" Medicaid is called "Community Medicaid. The other is LTC or NH medicaid.

The five year look back applies to "gifting" of assets. Selling a home at FMV is not gifting.

I understand your hesitancy to reach out for legal help due to your bad experience. But your mom needs a CERTIFIED eldercare attorney who knows the ins and outs of Medicaid her her state. Paying for this assistance is going to be priceless and give you peace of mind. Check out NELF.org
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

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