Expert: Dick Dennis - 3/4/2009

Question
My in-laws are elderly and live in a nursing home. Their granddaughter took care of them and lived in their home for 21/2 yrs before they went to nursing home. When they moved, they transferred ownership of home to granddaughter. She sold home 3 months later (8/2008). After initially giving ok to tranfer, Medicaid later(01/2009) disallowed transfer and said money from house sale had to be returned. Problem--granddaughter now appears to be responsible for capital gain on house sale(didn't own for 2 years) in her income taxes. She will have to pay $3-4000. and got no benefit from ownership. If the grandparents had never transferred the house, they could claim sale and not owe any capital gains. QUESTION---is there any way for granddaughter to avoid paying the capital gain??

Answer
This is outside my expertise, Garry. I strongly suggest your granddaughter consults an ESTATE (not real estate) attorney. He/she will be able to answer your question. As you can see now that is very important to see that attorney before all this happened, especially when they anticipated going into a nursing home. The proper attorney would have been able to sidestep that problem. I do wish you well.