Selling a House to Pay for a Nursing Home, Assisted Living or Memory Care

By Hans Goldstein, EA · Updated October 15, 2026

Who can sign when selling a parent's house in a nursing home?

The seller has to be someone with legal authority. A buyer's title company will ask for the paperwork before it closes.

Can you sell your parents' home if they are in a nursing home? Yes, once the right person has authority to sign. A signature from someone who lacks capacity can void the sale, so an elder law attorney confirms who signs. State law varies.

What happens to the money after the house sells?

• It belongs to the owner, not the family. Put it in an account titled in the owner's name (or the trust's), and pay care from it first.
• Keep every record. Medicaid reviews 60 months of transfers. Keep the closing statement and every care payment.
• Do not gift any of it if Medicaid may be needed within five years. A gift inside the look-back causes a penalty period.
• Medicaid counts cash. Once the house is sold, the money is a countable asset. An elder law attorney should plan the spend-down before you list.
• The sale year raises income. A large taxable gain can raise Medicare premiums two years later; see Medicare IRMAA after a big gain.

2026 Medicaid and tax numbers at a glance

Sell now, hold until death, or give it away: what each costs in tax

Same house, three routes. Illustration, October 15, 2026: bought for $120,000 in 1985, worth $700,000 now, selling costs 6%, owner single and lived there 2 of the last 5 years.

To see your own numbers, use the installment sale calculator or email me the price and basis below.

Can a nursing home take your house?

No. A nursing home or assisted living community is a business that sends bills. It does not get title to your home. Three things can still reach the house:

• Unpaid bills. A facility can sue for a bill that is not paid, win a judgment, and record a lien against real estate. Your state's homestead rules decide how much protection you have.
• Medicaid. The house is usually not counted while you or your spouse live in it, or you intend to return, but states cap the home equity that is exempt. Federal law sets a floor of $500,000 and lets a state go up to $750,000, adjusted each year (42 U.S.C. §1396p(f), 42 U.S.C. §1396p). After the beneficiary dies, the state must try to recover what Medicaid paid from the estate, with exceptions such as a surviving spouse.
• Gifts. If you give the house away to qualify for Medicaid, a transfer inside the 60-month look-back creates a penalty period when no benefits are paid (42 U.S.C. §1396p(c)). Do not retitle the house until an elder law attorney says yes.

Medicaid rules are state by state. This page does not replace an elder law attorney. It covers the part most families do not get answered: what a sale does to the tax, and whether to sell at all.

What care costs, and why the house comes up

The CareScout Cost of Care Survey 2025 (July to November 2025) puts the national median for a private nursing home room at $129,575 a year and assisted living at $74,400 a year ($6,200 a month). Medicare does not pay for ongoing custodial care.

For most families the house is the only asset large enough to cover years of bills. If you hold the deed as a trustee or POA for a parent, see the page for you: selling a house in a trust to pay for care.

Options compared: ways to use the house to pay for care

What the sale costs in tax: a worked example

A widowed owner, 79, in assisted living, bought the home long ago. Basis with improvements is $150,000. It sells in 2026 for $1,300,000 with 6% costs ($78,000). Other income is $48,000 a year from Social Security and a pension. California.

The yearly payment is what you choose to match to the bill. Assisted living at the national median is about $74,400 a year, so a payment of this size covers it with room left over. A shorter payout saves less tax because more of the gain lands in each year.

Run on October 14, 2026 with the Goldstein & Co. engine: 2026 federal brackets, the 3.8% net investment income tax and AMT (IRS Rev. Proc. 2025-32), and 2026 state brackets. The 5.0% payout rate is an assumption, not a quote. After-tax money at the end assumes nothing is spent and both paths earn 5.0%, taxed every year. These are estimates, not a quote.

Honest notes on the example

• If the gain is under the exclusion, there is no tax to manage. A single owner excludes up to $250,000 of gain, a couple up to $500,000 (IRC §121). You need to have owned and lived in the home two of the last five years. Time in a state-licensed care facility counts as living in the home if you could no longer care for yourself and lived there at least one year in that five (§121(d)(7)).
• Step-up. If you keep the house and die owning it, the basis resets to the value at death and the gain can vanish. That is the main reason to compare against keeping and renting, not only against a cash sale.
• Payments owed at death. The gain left in unpaid payments is income in respect of a decedent (IRC §691(a)(4)). Heirs pay tax on it as it arrives, with no step-up on that part.
• Medicaid. Medicaid counts payments as income, and an installment note can count as a transfer unless it meets strict rules (42 U.S.C. §1396p(c)(1)(I)). Ask the elder law attorney before you change how the house is sold.

Questions answered below: Questions about whether a nursing home or Medicaid can take the house · Questions about Medicaid, the sale and the look-back · Questions about who pays for assisted living, memory care and nursing homes · Questions about taxes on care costs and on the sale · By state

Questions about whether a nursing home or Medicaid can take the house

Short version: no facility takes title to your home. The risks are unpaid bills, Medicaid rules and gifts made too soon. Details below.

Can a nursing home take your house in Florida, California, Texas, New York, Pennsylvania, Virginia, Ohio or Michigan?

No facility takes title to your house in any state. What differs by state is how much home equity Medicaid protects, how far estate recovery reaches after death, and how much tax a sale triggers. The table below lays out the state-by-state differences that matter most. A Medicaid answer for your state comes from an elder law attorney in that state.

Find your state in the table at the end of this page. Everything on the federal side (the 60-month look-back, the equity cap range, the transfer exceptions) is the same in all states; what each state adds is where the answers diverge.

Can a nursing home take a house that is in a trust?

No, but a trust does not always protect it either. A revocable trust gives no protection: Medicaid treats the trust assets as yours, and a creditor with a judgment can reach them. An irrevocable trust set up more than 60 months before applying can protect the house, but you lose control and the basis step-up (Rev. Rul. 2023-2).

Estate recovery reaches probate assets everywhere and, in states that expand it, can reach trust assets too (42 U.S.C. 1396p(b)). Whether a trust helps depends on the type, the timing and the state, so see an elder law attorney before you move the house.

Can a nursing home take my house?

It cannot take it directly, but it can sue for the unpaid bill, win a judgment and record a lien on real estate you own. Your state's homestead law decides how much of the house is protected from that judgment. A judgment lien then has to be paid when the house sells.

The better path is early: tell the business office, ask what the monthly rate covers, apply for Medicaid if you qualify, and have an attorney review the admission agreement.

Under federal rules, a facility that takes Medicare or Medicaid cannot require a family member to guarantee payment as a condition of admission (42 CFR 483.15). Do not sign as the "responsible party" in a way that makes you personally liable without reading it.

Can a nursing home or Medicaid take my mother's house, or a house willed to me?

A nursing home cannot. Medicaid usually does not count the home while your mother lives there or intends to return, but the state can try to recover what Medicaid paid from her estate after she dies, with exceptions such as a surviving spouse or a disabled child.

If the house passes to you by will, it can be reached in estate recovery before you receive it (42 U.S.C. 1396p(b)).

The house is not at risk if she never uses Medicaid. If she may, the time to plan is before she needs care: estate recovery can reach the house later, but a well-timed plan and the exempt transfers (spouse, caregiver child, disabled child) can reduce it. Elder law attorney first.

Will a nursing home take my house if I go in?

No. Going into a nursing home does not transfer your house to the nursing home. You still own it. The three risks are an unpaid bill turning into a lien, Medicaid counting the house or claiming against it later, and gifts made inside the look-back. See the first section on this page.

If you enter long-term care and expect to return, the house is usually still exempt for Medicaid in many states, up to the home equity cap. If you do not expect to return, that protection can end and the house may count. The facts and the state decide.

Questions about Medicaid, the sale and the look-back

Do I need an elder law attorney for Medicaid and the house, and what do I ask?

Yes, if Medicaid may be needed in the next five years or the house is the main asset. Medicaid rules are set state by state, inside federal limits, and an elder law attorney in your state is who gives the answer for your facts. A CPA covers the tax; the attorney covers eligibility, the look-back and estate recovery.

Ask: Does my state count this house, and what is the equity cap? What can I do now without a penalty? Does the state recover from trusts or joint property?

What do you charge? Bring the deed, the trust, the power of attorney and the last five years of statements.

Also have the attorney read the nursing home admission agreement before anyone signs: a facility that takes Medicare or Medicaid cannot require a family member to guarantee payment (42 CFR 483.15), but a family member who signs as the responsible party voluntarily may be bound.

How far back can Medicaid look at a house transfer?

Sixty months, which is five years, in all states for transfers made on or after February 8, 2006 (42 U.S.C. 1396p(c)). Medicaid asks for records of gifts and below-market sales in that window. A transfer inside it creates a penalty period when Medicaid will not pay for long-term care.

A sale at fair market value is not a gift, but the cash is then countable. A gift of cash or the house to children, or a sale to them for far less than it is worth, can trigger the penalty.

Exempt transfers of the home include a spouse, a child under 21 or blind or disabled, a sibling with an equity interest, and a caregiver child who lived there at least two years.

Can Medicaid come after your house after you die (estate recovery)?

Yes, in many cases. Federal law requires states to recover the cost of long-term care from the estates of recipients who were 55 or older (42 U.S.C. 1396p(b)). The estate must at least include probate property such as a house in your name. States may extend recovery to anything you had a legal interest in, such as joint tenancy or a living trust.

States must wait if there is a surviving spouse, or a child who is under 21, blind or disabled, and must have a hardship process. Ask the attorney whether your state expanded the estate definition, because that changes whether a trust helps. This is why some families sell and spend the money on care rather than leave it for recovery.

Can I sell our house if my spouse is in a nursing home?

Yes, if both of you are the owners and the right people sign, or if the owner has authority for the other. A spouse at home (the community spouse) is generally protected: the home is exempt for Medicaid while the spouse lives there, and the home equity cap does not apply when a spouse lives in it. Selling the home can end that protection if it becomes cash.

Tax: a married couple can exclude $500,000 of gain if both meet the use test, and a surviving spouse can use $500,000 if the sale is within two years of death (IRC 121(b)). If one spouse is in a licensed facility, the use test still counts under the care facility rule. Plan the sale and the Medicaid application together.

Mom wants to give her money or house to us kids before she goes into memory care. Is that safe?

Usually not. Any gift made in the 60 months before applying for Medicaid can cause a penalty period, even a gift made years ago to avoid care costs. The penalty is figured by dividing the gift by a state number, so a large gift means months without coverage.

Small ordinary gifts, a transfer to a spouse, and transfers into certain trusts for a disabled person are treated differently. A gift of a house also loses the step-up. If she wants to help the kids, an elder law attorney can show lawful ways. Do not transfer money "to help pay rent" or "to hold" without checking: Medicaid asks about it.

How do I avoid losing my house to a nursing home?

Lawful ways include: keeping a spouse living in the house; using the caregiver-child exemption; transferring the house to a disabled child, a child under 21 or a sibling with an equity interest; an irrevocable trust funded more than 60 months before applying; and spending down on a plan under state rules. All need an elder law attorney in your state.

What not to do: give the house to the kids last month; move it without advice; or hide it. Gifts can create a penalty, can cost the heirs the step-up, and can ruin a Medicaid application. Paying private for care from other money, or selling the house at full value and using the cash for care, are lawful and need no special trick.

Do I have to sell my house to qualify for Medicaid or to go into a nursing home?

Not at first. Most states exempt the home while you, your spouse or a dependent relative live there, or while you intend to return, up to a home equity cap set by your state between a federal floor and ceiling (published by CMS each January). Above the cap, Medicaid may not pay for long-term care until the equity drops.

The house usually becomes a problem when you do not expect to return, when the equity is over the cap, or after death when the state seeks to recover. In the UK, "care home fees" and "mum's house" follow different rules; this page covers the U.S. If you are not on Medicaid, no one can make you sell.

Does selling my house affect Medicaid, and can I sell it while on Medicaid?

Yes. Once the house is sold, the exempt home becomes cash, and cash counts toward Medicaid's asset limit. Selling while on Medicaid can lead to a loss of benefits until the money is spent down on allowed things such as care, debts and funeral costs, or put into an allowed vehicle.

An exception: if the owner is still living in the house and will buy a replacement home, some states let the proceeds roll into a new home. Rules vary by state.

Get the attorney's plan first, because payments received over years count as income, and a note where you act as the lender can be treated as a transfer unless it meets strict rules (42 U.S.C. 1396p(c)(1)(I)). Any sale that pays out over years needs the attorney's review first.

Questions about who pays for assisted living, memory care and nursing homes

Can I rent out the house to help pay for care?

Yes, and it is often the best answer if you may not need the money for long. Rent helps, you keep the house, and your heirs get the step-up in basis if you die owning it. Rent seldom covers the full bill, and the rent is taxable income, with repairs and vacancies on you.

If you rent it, you can deduct expenses and depreciation, but you will owe the depreciation back (taxed up to 25%, IRC 1(h)) if you sell. Renting can also affect the home sale exclusion over time: you need two years of main-home use in the last five.

The care facility rule helps for a time, then fades. A reverse mortgage does not allow renting the whole home. Keep the numbers side by side before you choose.

How can I pay for memory care or a nursing home without selling the house?

Use other money first: savings, retirement accounts, a pension, Social Security, long-term care insurance, and veterans benefits if you qualify. Then consider renting the house out, a loan against it while the owner can sign, or Medicaid under your state's rules. Which is best depends on how long care will last.

Rent rarely covers a full bill. A reverse mortgage ends when the owner moves out for good. Paying privately without Medicaid is possible if you have enough in other assets, and liquidating investments is a tax decision of its own: sell the lots with the least gain or the highest basis first, and look at the tax on each sale.

How should we pay for memory care from savings and investments, and what do we sell first?

Use cash first, then sell investments in the order that costs the least tax: taxable accounts with the highest basis or with losses first, then lots with long-term gains, and retirement accounts last unless the withdrawal is covered by the medical deduction. Each IRA withdrawal is ordinary income, so draw it with the 7.5% medical floor in mind.

For 2026, long-term gains are taxed at 0% up to $49,450 of taxable income for a single person ($98,900 married filing jointly), 15% above that and 20% above $545,500 single ($613,700 joint) (Rev. Proc. 2025-32).

A parent in care often has a low bracket, so selling some appreciated stock in a low-income year can cost nothing. If the parent may need Medicaid, ask the elder law attorney first: sale cash is countable.

Should I sell my house to pay for a nursing home, assisted living or care home fees?

Sell if the house is your main money for care, care will run for years and the tax is manageable. Keep it if other money covers care and heirs would get the step-up, or if you plan to rent it out. The honest comparison is sell vs keep-and-rent, not sell vs do nothing.

A sale at fair value does not trigger a Medicaid penalty, but the cash counts. Tax can be small with the $250,000 exclusion ($500,000 for a couple), or large with a long-held home; the worked example on this page shows the numbers. If you only need cash for a short gap, a loan against the house may cost less than a sale.

Does Medicaid pay for assisted living, memory care or a nursing home?

Medicaid pays for nursing home care for eligible people in all states. For assisted living and memory care, coverage depends on the state: many states pay for care services through a waiver program but not for room and board, and some facilities do not accept it. Eligibility turns on income, assets, level of care and the home rules above.

Start with your state Medicaid agency (the website ends in .gov) or an elder law attorney. Ask: does this program cover assisted living here, is there a waiting list, and does the facility have a Medicaid bed. Do not assume a facility that "accepts Medicaid" will keep you when private funds run out.

Do Medicare, health insurance, long-term care insurance, the VA or an HSA pay for assisted living or a nursing home?

Medicare pays for skilled nursing care only, for up to 100 days per benefit period after a qualifying hospital stay, with a daily copay after day 20. It does not pay for custodial care. Regular health insurance follows the same pattern.

Long-term care insurance pays under the policy's terms. The VA Aid and Attendance pension can add money for a wartime veteran or surviving spouse who needs care and meets income and asset limits.

An HSA can pay for qualified medical expenses, which can include qualified long-term care services and long-term care insurance premiums within limits (IRC 213(d)). Do not count on any of these without reading the policy or calling the program.

Who pays for assisted living, memory care and nursing homes?

Mostly families and residents do, from savings, income, long-term care insurance and the sale of a home. Medicare does not pay for custodial care. Medicaid pays for nursing home care for people who meet income and asset rules, and many states have a waiver that pays for services in assisted living, usually not the room and board. The VA pays some veterans.

Which pays depends on the person, the setting and the state. Ask the facility which payers it takes before you tour. Many assisted living communities are private pay only.

Questions about taxes on care costs and on the sale

Do I owe capital gains tax if I sell my home after moving to assisted living or a nursing home?

Maybe not. If you owned and lived in the home at least one year of the five before the sale, and you moved to a state-licensed care facility because you can no longer care for yourself, you keep counting the time in the facility as time in the home (IRC 121(d)(7)). The $250,000 exclusion ($500,000 for a couple) then applies if you meet the rest of the test.

If your gain is higher, the rest is taxed at 0%, 15% or 20% federal (2026), plus possibly the 3.8% surtax and state tax. See the worked example above for a full 2026 calculation. Report the sale if you receive Form 1099-S. A tax preparer can confirm the care facility rule on your facts.

Is memory care or Alzheimer's care tax deductible?

Usually yes, more than ordinary assisted living. A person with Alzheimer's or dementia usually meets the "chronically ill" test because of severe cognitive impairment, so qualified long-term care services, and the full cost of a facility where medical care is a principal reason for the stay, are medical expenses (IRC 213(d), 7702B(c); Treas. Reg. 1.213-1(e)). The deduction applies only above 7.5% of AGI.

The facility's bill, a physician's letter and a plan of care are the proof. In-home care for a person with dementia can qualify too. The deduction is the main tax help here. Ask a preparer to run it.

Is assisted living tax deductible?

Partly, and sometimes all of it. Assisted living is a medical expense deduction only above 7.5% of adjusted gross income. If the resident is "chronically ill" (can't do two daily activities for 90 days or has severe cognitive impairment, confirmed in writing by a licensed health care practitioner) and a plan of care exists, qualified long-term care services count (IRC 213(d)(1)(C), IRC 7702B(c)).

If the resident is not chronically ill, only the medical care part counts, not rent and meals. Ask the facility for a bill that separates them. A child who pays the bill for a parent who is their dependent may be able to claim it; ask your preparer. Not tax advice.

Are nursing home costs tax deductible?

Often yes, as medical expenses, but only the part above 7.5% of your adjusted gross income, and only if you itemize. If medical care is a principal reason for the stay, the whole cost, including meals and lodging, counts (Treas. Reg. 1.213-1(e)(1)(v)). If not, only the care part counts.

A sale can work against you here. A big taxable gain raises your AGI, which raises the 7.5% floor. The same year, a large medical deduction can offset part of the income. Ask a preparer to run the year both ways before the closing date is set. Keep invoices that split medical care from room and board.

Is there tax relief for a nursing home resident's house, such as property tax relief?

Some states and counties lower or postpone property tax for seniors, and some keep an exemption in place when the owner lives in a care facility. The rules differ, and many have income limits, so call the county assessor in the county where the house sits. Postponement programs often attach a lien that is repaid when the house sells.

Income tax relief comes mostly from the medical deduction and from the home sale exclusion for a long-time owner. Both are covered in the sections above.

Can a nursing home take your house in your state? What really differs by state

In every state the answer to "can a nursing home take my house" is the same: a nursing home or assisted living community does not get title to your home. Four things do change from state to state.

A Medicaid answer for a specific state comes from an elder law attorney in that state; the table shows where to look and what to ask. Rates and rules as of October 2026; confirm on the state return or with a preparer.

The 60-month look-back (42 U.S.C. 1396p(c)) is federal, but states run the penalty calculation. Details: paying for long-term care with your home and the sections above.

Can a nursing home take your house in Florida?

No. A nursing home cannot take your house in Florida. What Florida decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: No state income tax on the gain. Ask a Florida elder law attorney: Florida's home equity cap, how far Florida estate recovery reaches, and how Florida homestead rules treat a nursing home bill.

Can a nursing home take your house in California?

No. A nursing home cannot take your house in California. What California decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Up to 13.3%, taxed as ordinary income.

Ask a California elder law attorney: Medi-Cal's asset, look-back and estate recovery rules, which have changed in recent years: confirm the rules in force on the day you apply.

Can a nursing home take your house in Texas?

No. A nursing home cannot take your house in Texas. What Texas decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: No state income tax on the gain. Ask a Texas elder law attorney: Texas's home equity cap, estate recovery scope, and Texas homestead protection.

Can a nursing home take your house in New York?

No. A nursing home cannot take your house in New York. What New York decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Up to 10.9% state; New York City residents also pay a city income tax.

Ask a New York elder law attorney: New York's home equity limit and how its look-back applies to the type of care you need.

Can a nursing home take your house in Pennsylvania?

No. A nursing home cannot take your house in Pennsylvania. What Pennsylvania decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 3.07%. Ask a Pennsylvania elder law attorney: Pennsylvania's estate recovery scope, and the state inheritance tax on many transfers at death.

Can a nursing home take your house in Virginia?

No. A nursing home cannot take your house in Virginia. What Virginia decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 5.75%. Ask a Virginia elder law attorney: Virginia's home equity cap and estate recovery scope.

Can a nursing home take your house in Ohio?

No. A nursing home cannot take your house in Ohio. What Ohio decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 2.75%. Ask an Ohio elder law attorney: Ohio's home equity cap and estate recovery scope, including trusts and joint property.

Can a nursing home take your house in Michigan?

No. A nursing home cannot take your house in Michigan. What Michigan decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Flat-rate state income tax: confirm the current rate on the Michigan return. Ask a Michigan elder law attorney: Michigan's home equity cap and estate recovery scope.

Can a nursing home take your house in Arizona?

No. A nursing home cannot take your house in Arizona. What Arizona decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 2.5%. Ask an Arizona elder law attorney: Arizona's home equity cap, estate recovery scope, and how its community property rules apply to your deed.

Can a nursing home take your house in Nevada?

No. A nursing home cannot take your house in Nevada. What Nevada decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: No state income tax on the gain. Ask a Nevada elder law attorney: Nevada's home equity cap and estate recovery scope.

Can a nursing home take your house in New Jersey?

No. A nursing home cannot take your house in New Jersey. What New Jersey decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 10.75%. Ask a New Jersey elder law attorney: New Jersey's estate recovery scope, and its inheritance tax on some transfers at death.

Can a nursing home take your house in Illinois?

No. A nursing home cannot take your house in Illinois. What Illinois decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: Top rate 4.95%. Ask an Illinois elder law attorney: Illinois's home equity cap and estate recovery scope.

Can a nursing home take your house in Washington?

No. A nursing home cannot take your house in Washington. What Washington decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: No tax on a real estate sale: the 7% capital gains tax does not apply to real estate. Ask a Washington elder law attorney: Washington's home equity cap and estate recovery scope.

Can a nursing home take your house in Massachusetts?

No. A nursing home cannot take your house in Massachusetts. What Massachusetts decides is the Medicaid home equity cap within the federal range, how far estate recovery reaches, and any homestead protection from creditors. State tax: 5% plus a 4% surtax on income over about $1 million. Ask a Massachusetts elder law attorney: The MassHealth home equity cap and estate recovery scope.

Your state is not listed? The same four questions apply. Ask an elder law attorney in your state, and a CPA about the state tax on the sale. This page is education, not tax or legal advice.

When this does not fit

• You may not live long, and other money covers care. Keep the house, rent it if you can, and let heirs take the step-up.
• Medicaid is the plan. The attorney's plan controls. A payout that raises your income may work against it.
• The gain is under the exclusion. You only need a good sale. See the home sale exclusion page.
• You need all the cash now. Payments are fixed. A large entrance fee can be paid at closing, with only the rest spread.
• You still live in the home and have in-home care. A reverse mortgage or home-equity line may fit better than a sale.
• Very large balances. Over $5 million of installment obligations, an interest charge applies (section 453A). Personal-use homes are exempt, but confirm with your CPA.

A big gain also raises your Medicare premiums for two years (IRMAA). Spreading the gain keeps each year's slice lower.

What you can do this week

1. Call an elder law attorney in your state. Ask about Medicaid, the home equity cap, and whether to retitle anything. Do not retitle first.
2. Find your basis: the purchase price plus improvements, from old closing papers and county records. Do not guess.
3. Get a broker opinion of value, and tell the listing agent a payout structure may be part of the sale. It costs the buyer nothing.
4. Run the numbers before you sign a listing. One 15-minute call does it.

Tools: the seller net sheet after tax, the structured sale calculator, and how a structured installment sale works. Related: reverse mortgage alternatives, how seniors can owe $0 federal capital gains. Planning a sale of a farm? See selling the family farm.

If you are the elder law attorney, fiduciary or care manager, the page for you is For Professionals.

Frequently asked questions

Can a nursing home take your house?

No. A nursing home does not get title to your house. But an unpaid bill can become a judgment and a lien, Medicaid caps the home equity it will exempt, and after the Medicaid recipient dies the state may claim against the estate. Giving the house away inside the 60-month look-back can delay Medicaid. Ask an elder law attorney in your state.

How to pay for a nursing home with a house?

You sell it and use the proceeds, keep it and rent it out, borrow against it while you live there, or qualify for Medicaid, which usually exempts the home up to a state equity cap. For a large gain, a sale paid over years can match the monthly bill and lower the tax. Which route wins depends on life expectancy, other money and Medicaid.

How to pay for assisted living with a house?

Most owners sell the house or rent it. A reverse mortgage does not work once you move out for good, and a home-equity loan needs income and capacity. The national median for assisted living is $74,400 a year (CareScout 2025), so many families compare sell and invest against keep and rent.

How to pay for memory care without selling the house?

Rent the house out, use other savings or long-term care insurance, apply for VA Aid and Attendance if eligible, or plan for Medicaid with an elder law attorney. A reverse mortgage usually ends when the borrower moves to memory care, and a new loan needs the owner's capacity.

Should I sell my house to pay for assisted living?

Sell if you need the money and the house will not be used again, especially if the gain is under the exclusion. Keep and rent it if you may not live long and other money covers care, because heirs get the step-up in basis. Run both with your real numbers before you list.

What is the capital gains tax when moving to assisted living?

You owe tax only on the gain above the exclusion: $250,000 if single, $500,000 if married filing jointly. Time in a licensed care facility counts as living in the home if you lived there at least one year in the five years before the sale (IRC §121(d)(7)). In our example, a $1.3 million California sale leaves $822,000 taxable and about $255,891 of tax in one year.

Selling a home after moving to assisted living: how is it taxed?

The same §121 rules apply. If you owned and lived in the home two of the last five years, or qualify under the care-facility rule, you can exclude up to $250,000 ($500,000 for a couple). Gain above that is taxed at long-term capital gain rates, plus the 3.8% net investment income tax and state tax.

Can I use home equity to pay for long-term care?

Yes, in four ways: sell, rent, borrow while you still live there (a reverse mortgage or home-equity line), or plan for Medicaid. Each fails in a different case. Moving out for good ends a reverse mortgage, and a lender wants income and capacity for a home-equity loan.

Does Medicaid take your house?

Not while you or your spouse live there, or you intend to return, up to a state equity cap, which is $752,000 to $1,130,000 for 2026 depending on the state (CMS, April 27, 2026). After the recipient dies, the state must try to recover from the estate, with exceptions such as a surviving spouse or disabled child.

What happens to a structured payout if I die?

The remaining payments go to your named beneficiary. The gain in them is income in respect of a decedent (IRC §691(a)(4)), so heirs pay income tax as payments arrive, with no step-up on that part. A short life expectancy argues for a cash sale or for keeping the house.

What does a real analysis cost?

The first 15-minute scope call is free. A written analysis is $5,000. This page and the calculators are free.

Can you sell your parents' home if they are in a nursing home?

Yes, once someone has authority to sign: the owner if they have capacity, an agent under a durable power of attorney that covers real estate, a trustee, or a court-appointed conservator. Without that authority, nobody can sell. See the who-can-sign table above.

Can I sell my parents' house if they have dementia?

Only through someone with legal authority: a successor trustee, an agent under a power of attorney that covers real estate, or a conservator with court approval. A signature from a parent who lacks capacity can void the sale. An elder law attorney confirms who signs.

Can I sell my house to my son for $1 before I go to assisted living?

You can, but it is a gift. Medicaid reviews transfers for 60 months and charges a penalty for gifts, your son takes your old basis and loses the step-up at death, and a gift tax return may be needed. Talk to an elder law attorney before you sign anything.

Can I sell my house if my husband is in a nursing home?

Yes, if you both own it you both sign, or the spouse at home signs with a power of attorney for the other. A spouse living in the home protects it from Medicaid recovery and liens, and the spouse at home can usually keep it. Selling changes that, so plan the sale with an elder law attorney.

Can a nursing home put a lien on your house?

A nursing home needs a court judgment to place a lien. A state Medicaid agency can place a lien on the home of a permanent nursing home resident under 42 U.S.C. 1396p(a)(1)(B); it ends if the person returns home, and it is not allowed while a spouse, a disabled child, or a qualifying caregiver child or sibling lives there.

How far back can a nursing home take your house?

A nursing home does not look back. Medicaid does: 60 months for transfers made on or after February 8, 2006 (42 U.S.C. 1396p(c)(1)(B)). A gift or below-market sale inside that window can cause a penalty period.

When can a nursing home take your house?

It cannot take it. A creditor needs a court judgment, and Medicaid can claim against the estate after death in most states. Neither is the nursing home simply taking the house.

How to avoid a 5 year lookback?

There is no trick. Transfers to a spouse, to a disabled child or a trust for them, to a caregiver child who lived there 2 years and gave care, or to a sibling with an equity interest who lived there 1 year are exempt. Anything else needs an elder law attorney and time.

Can a nursing home take my father's property if it is willed to me?

The will passes the property at death, but if your father received Medicaid, the state can file a claim against his estate first in many states. Ask an elder law attorney about estate recovery in your state.

Does a nursing home take your pension and social security?

If you are on Medicaid, most of your income goes toward the cost of care, except a personal needs allowance the state sets. If you pay privately, payment follows your contract with the facility.

What happens if an elderly person cannot afford a nursing home?

The facility bills until the money runs out, then Medicaid pays if the person qualifies on income and assets. Selling a house, renting it, or using other savings are the usual ways to cover the gap before that.

Do I owe capital gains tax if I sell my parent's house to pay for assisted living?

Maybe. Up to $250,000 of gain is tax free if the parent owned and used the home as a main home 2 of the last 5 years (IRS Topic 701), and time in a licensed care facility can count. A long-held home can have a gain above that. The sell, hold or gift table shows a $288,000 taxable example.

Sources and dates

• IRC §121, home sale exclusion and (d)(7) care facility rule, checked October 14, 2026
• IRC §1014, basis of property acquired from a decedent, checked October 14, 2026
• IRC §691 and §453B(c), installment obligations at death, checked October 14, 2026
• 42 U.S.C. §1396p, Medicaid home equity limit, look-back, transfers and estate recovery, checked October 14, 2026
• 24 CFR §206.27, reverse mortgage due and payable, checked October 14, 2026
• CareScout Cost of Care Survey 2025 (national medians), checked October 14, 2026
• IRS Rev. Proc. 2025-32, 2026 tax figures, checked October 14, 2026

Who wrote this?

Get the REAL numbers

Hans Goldstein, EAAdmitted to practice before the IRS

These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.

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