My father is in a nursing home and I need to sell his home before it goes into foreclosure and to pay for his care. The house is in need of lots of repairs and I will not be able to sell it at market value. I have been told that if I sell the house under market and have to apply for medicare that it will be considered fraud. Is this true? Should I just pay for his care and let the house go into foreclosure? By selling I could have $5,000 to help pay for his care.
If the house is going into foreclosure I don't know if the bank would let you sell the house below market value. Who has decided on the market value of this house? If you can afford to do so [or your Dad pays] get a licensed Appraiser to give you a written report on the worth of the house. I did that when I sold my Dad's house and I didn't have the time or energy to make repairs/updates. The house was listed with a Realtor a tad above the Appraised value, and sold just a tad below value.
long as I don't sell it for a dollar or to a relative too cheaply they understand I have to get what I have to get.
So at best if dad's house sold and the mortgage satisfied, all that could be left is 5K? $ 5,000.00 - is that right? that is very little money for a lot of time & energy both for dealing with the house and then dealing with ineligibility & re-eligibility application with Medicaid. If things drag on and there are surprises in getting closing done, there may not even be 5K.
Placing a home on the market has costs. Utilities, taxes, insurance, maintenance. So right now just who is paying all these costs? Buyers can place a lot of the house sale costs onto the seller, especially if its a distressed motivated seller situation. Taxes have to be current in order for closing to be done; if he's at all delinquent, there will be interest and fees as well as the past due. For most places taxes are due in full by end of January unless there are existing exemptions/waivers, so someone is going to need to pay those taxes if the house isn't sold & gone asap. Dad is on Medicaid and so all his income less a smallish personal needs allowance must be paid to the NH under Medicaid's copay / SOC (share of cost) requirement. So who is paying house costs; Or are all of these being walked on like like the mortgage is?
Are you or other family paying for any of the house costs and needing to be repaid? If so, you are likely not to ever get reimbursed. Medicaid really tends to view any $ spent by family on their parents to be done under a sense of familial duty so not to be reimbursed, you'd need to have some sort of pre-existing note or agreement to do this and Medicaid would have to allow. It's the sort of issue that holds up a closing and can kill a sale.
If the property could take months to go to a closing and you are finding that you personally are having to front all sorts of $ and you don't really have the $ or the energy & time to deal with the house, it may be best to just let the foreclosure happen. Dad walks on the house. It's not like he needs a good credit score. You send the keys certified mail with the return registered receipt to the mortgage holder to the address in the foreclosure notice. Medicaid could care less if his house is in foreclosure; as long as dad meets the medical and financial "at need" criteria for Medicaid, he's good. Mortgage companies have a whole established system for dealing with abandoned blighted PIA properties. None of this is your problem. You just mail the keys. The only blowback will be if & when dad gets a 1099-C Cancellation of Debt for the foreclosure amount but that's a pretty straightforward CPA tax filing for dad for whatever tax year the 1099-C comes for.
Keeping a on-Medicaid & in a NH parents homestead can be done. But keeping it and fronting costs on it, just to end up having Medicaid get all the proceeds from a sale, may not be the best financial strategy.
See All Answers