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Chapter 8. Planning for the Home > Sell the Home to the Children

Sell the Home to the Children

Another housing option is for seniors to sell their home to their children for its fair market value and rent it back from the children. In some instances, this can work to the benefit of everyone. The children get an asset that increases in value over time while getting the tax benefits of mortgage interest deductions, maintenance and upkeep as well as depreciation. The parents, who lease the property back from their children, get money they can invest as they choose. And with the capital gains exemption for the sale of a home at $250,000 for a single person and $500,000 for a married couple, most seniors will be able to avoid paying any income taxes on the proceeds of the sale. In addition, many seniors may wish to receive payment for the sale of the property through an annuity, one that if properly done can provide them with regular monthly income for life while not being a countable asset for Medicaid eligibility.


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