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Debbie Cheater
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Listed mother "Free and Clear" home for sale, is this smart or.?

Debbie Cheater
Posted Sep 10 2022, 16:24

My mother's home in Kuna Idaho is free and clear and is listed currently of 415K. My mother (widow) was recently placed into a nursing home and her home was just listed on MLS is this the right move? My mother has a nest egg of cash to support her for approx. 5 years to live off. Selling her home would put the 415K added to the nest egg and allow for comfort financially. VS the other option of keeping the home and allowing it to be managed and rented out for a approx. $2100 monthly. There are two adult children that would be on the will if anything were to ever happen. What is the right move, what would you do?

Home is located 

860 S Tanami Ave, Kuna, ID 83634 | MLS #98857546 for reference.  

Thanks! 

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Mike Hern
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Mike Hern
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Replied Sep 10 2022, 19:11
Quote from @Debbie Cheater:

My mother's home in Kuna Idaho is free and clear and is listed currently of 415K. My mother (widow) was recently placed into a nursing home and her home was just listed on MLS is this the right move? My mother has a nest egg of cash to support her for approx. 5 years to live off. Selling her home would put the 415K added to the nest egg and allow for comfort financially. VS the other option of keeping the home and allowing it to be managed and rented out for a approx. $2100 monthly. There are two adult children that would be on the will if anything were to ever happen. What is the right move, what would you do?

Home is located 

860 S Tanami Ave, Kuna, ID 83634 | MLS #98857546 for reference.  

Thanks! 


 There are lot of moving parts here. 

1st, you have to take into account selling costs of about 8% (agent, closing, concessions, etc) so the cost to sell is like $32,000

2nd If she has lived in the property for 2 of the last 5years she is granted tax exemption on abut $250,000 in capital gains. It's a complicated calculation based on her indiviual facts but a CPA can figure it out for you if any capital gains will need to be paid.

3rd Right now inflation is running at break neck speed and is likely to get worse. So, any money in the bank will lose anywhere from 8% to 15% in value every year. When inflation is high, it's best to have your money in assets, not cash.

4th Some states require you use all assets before the state steps in to help with expenses. I'm not sure how that would affect things.

5th If the heirs inherit the property they inherit it tax free, so both mom and heirs don't pay taxes. That can be a substantial savings.

6th With inflation as bad as it is and likely to get worse, you may be seriously underestimating how much a month it will take to keep her in the care facility. You may be way off on your calulations of the nest egg if the house was sold. It could be far less than your numbers.

7th If you keep the house and rent it out, you have a couple of thousand  dollars more a month to tend to her needs for as long as you keep the property.

I vote for number 7

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Don Spafford
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Don Spafford
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Replied Sep 13 2022, 13:37

The nursing homes tend to require that all assets are liquidated and turn control over to them unless someone can demonstrate enough liquidity to be private pay. I'm assuming this facility is somewhere around $10k/mo which is about average. If that house rents for $2100, even though it is free and clear, there are still taxes and insurance to cover. With her no longer living there she will probably lose the owner exemption. So the cash flow will be less. Then if you don't sell it within 2 years, there will be capital gains to pay on it, unless of course it passes down to the heirs which receives the step up basis.

Another option to consider is what if you can take that $400k now to invest in something that could bring in around 15% cash on cash, or more, which would come out to be about $5k/mo for at most 5 years, which should also help to extend the current savings she has. Then, after 4-5 years the $400k is returned plus additional equity on top of the cash flows. Then, hopefully she is still living, you could have about double what you started with to reinvest for about the same expected returns which would then potentially be enough to fully cover her monthly expenses for the next 5 years which would let her other savings grow some or at least remain where it is at, then when that second investment finishes, reinvest it again to produce much more than she needs while also building a large nest egg for her heirs.

Obviously without knowing enough about her condition or circumstances, that would need to be considered and she may need to have a power of attorney for her finances. But if she is in good sound mind, I personally would have done that with my Mother had she lived long enough. Her 1 year stay at a skilled nursing facility pretty much wiped out the little savings she had before she passed and only had the house left after that.

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Jason Bohling
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Jason Bohling
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Replied Sep 17 2022, 21:49
Quote from @Debbie Cheater:

My mother's home in Kuna Idaho is free and clear and is listed currently of 415K. My mother (widow) was recently placed into a nursing home and her home was just listed on MLS is this the right move? My mother has a nest egg of cash to support her for approx. 5 years to live off. Selling her home would put the 415K added to the nest egg and allow for comfort financially. VS the other option of keeping the home and allowing it to be managed and rented out for a approx. $2100 monthly. There are two adult children that would be on the will if anything were to ever happen. What is the right move, what would you do?

Home is located 

860 S Tanami Ave, Kuna, ID 83634 | MLS #98857546 for reference.  

Thanks! 


First of all, this is a tough decision, and I wish you, your mom and y'all's family the best. These things are never easy, and I hope y'all can find the clarity you need to make the best informed decision you can.

My family ran into this same situation with my grandma a few years back. She lived in Texas and owned 2 properties with some cash in the bank. The family decided it was best in this situation to sell the properties to build up her cash, because as @Mike Hern pointed out, states can require the estate to be completely depleted aside sometimes from a few things before the government will step in as the payer for long-term care which is done through Medicaid.

Also, be aware that back in 1993 a bill was passed and signed into law (to the best of my knowledge this still stands but as always, check with an estate attorney to verify) that REQUIRES every state to attempt to recover i.e. clawback the costs incurred for the long-term care (i.e. nursing home care) paid out by the state through Medicaid. Meaning, say all assets are depleted but the house is still owned at the time of death and the government has paid $100,000 for services up until death. The house will not be able to pass cleanly to heirs with a step-up in basis because they will have put a $100,000 lien on it to recover what was spent by the government for her care. Unless you have other means to repay the $100,000 in this example, you will have to sell the home to cover the debt.

This factored into the decision to sell my grandma's properties because there was a significant likelihood they would have to be sold anyway to settle her estate. By doing this within the first 2 years of her going in there, they were able to avoid capital gains taxes on the one that was her primary residence which maximized the amount of cash built up. Otherwise, if we had waited past the 2 years, she would have paid capital gains taxes on both properties. By having the tax-break on the one it kept more money in her estate to settle her estate with.

Good luck to ya.

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Jason Bohling
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Jason Bohling
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Replied Sep 17 2022, 22:56

*I meant 3 years instead 2 in regards to timeframe in which to sell my grandma’s house. Just wanted to give the correct info.