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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4474
Experience:  35 years tax experience, including four years at a Big 4 firm.
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My father gifted me his home of medicare -

Customer Question

My father gifted me his home for preparation of medicare - I sold the home for funds to pay for his care. Who pays tax if any and what is the consequence
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Hi from Just Answer. I'mCustomer I will assist. How long did you have the home before selling it?
Customer: replied 1 year ago.
30 - 90 days
Expert:  PDtax replied 1 year ago.
That's a problem. If you took title, you accept the home as a gift with your father's cost basis. If you sold it personally, any gain is taxable to you (it is not exempted). You might be able to support the transfer as a component of its planned sale, which is what I would try, but the facts of transfer would have to support things.
Customer: replied 1 year ago.
So dad does not have a penalty but I do.... what percent of the sales price...I also have my own home that I am purchasing does that make any difference
Expert:  PDtax replied 1 year ago.
For example, if Dad was unable to manage his affairs, and you were his power of attorney, I might argue that the transfer was done only to facilitate sale. Or, if there was a reverse mortgage on the place, that you took title to facilitate the sale and repayment of the loan. That sort of argument is the only way I know to avoid the tax yourself. It's not a percent of the sale price. Let's say he bought for $40,000, and put $25,000 in improvements in over the years, and you sold for $88,000 after expenses. The $23,000 gain is taxable to you. Your buying a home makes no difference.
Expert:  PDtax replied 1 year ago.
You might also get around the tax if Medicare had provided care and had a lien at sale. Let's say Dad was in nursing home, and medicare had advanced $23,000 for his care. Their advances are treated as a loan, which would eliminate the gain and your tax.
Customer: replied 1 year ago.
Thank you for your assistance. It is truly appreciated. Have a great day!
Expert:  PDtax replied 1 year ago.
If you qualify for the last suggestion, you will want a letter from Medicare regarding their advanced costs to support things at the date the property was transferred to you. Thanks for asking at Just Answer. Please rate my assistance when you accept, as this is how we are credited with assisting. I'mCustomer
Expert:  PDtax replied 1 year ago.
Hi again.Customerhere. If I have answered your questions, please take a moment to rate my assistance and close out your inquiry. Customer
Expert:  PDtax replied 1 year ago.
Hi again.Customerhere. Just a follow up to see if i have answered your question. If so, please rate my assistance to close out your request.