Can I Sell My Mom’s House If She’s in a Nursing Home?

Yes, you can sell your mom’s house if she’s in a nursing home, but two things have to line up first: someone must have legal authority to sign for her, and the sale has to be planned around Medicaid’s rules. The house is normally a protected asset while she’s receiving Medicaid-funded care. Selling it turns that protection into cash, and cash counts against a resource limit of just $2,000 for an individual.¹ Handled carelessly, the sale can cost her months of benefits.

Who Has Legal Authority to Sign

If your mother still understands the transaction and can approve it, she can sign the deed herself. If she can’t, someone else needs formal authority to sign on her behalf. There are two ways to get it.

The first is a durable power of attorney for finances. If she executed one before her health declined, pull it out and read it carefully. The document has to specifically authorize real estate transactions; a POA that covers only banking or bill-paying often won’t satisfy a title company or a buyer’s attorney. If the real estate language isn’t there and she still has capacity, she can sign a new one. If she doesn’t, the POA route is closed.

The second is guardianship or conservatorship. A judge decides whether she is incapacitated and, if so, appoints someone to manage her property. Expect attorney fees, court costs, and weeks or months of waiting. The guardian usually operates under ongoing court oversight, and the court may need to approve the sale itself before it can close. A durable POA put in place before a crisis is far cheaper and faster than guardianship afterward.

What Selling Does to Her Medicaid

Medicaid doesn’t count your mother’s primary residence when it checks her assets, provided she has expressed an intent to return home. Most states accept a simple written statement, and the exemption holds even if a return isn’t medically realistic.² A few states require a physician’s note or periodic reassessment. If no intent-to-return statement is on file, the home can lose its exempt status even without a sale.

There is also an equity cap. Federal law disqualifies a nursing home resident from Medicaid-funded long-term care if her equity in the home exceeds a threshold that each state sets within federal limits and adjusts annually.³ If her equity is above the state’s cap, the home counts as an asset even while she still owns it.

Selling ends the exemption. The moment the house becomes cash, the proceeds count against the $2,000 resource limit.² Even a modest sale will push her well above that line and suspend her Medicaid eligibility until the money is spent down on approved expenses.

Consider Transferring Instead of Selling

Federal law allows the home to move to certain people without a Medicaid penalty. These are transfers, not open-market sales, but if one of them fits your family, it can preserve far more than a sale would.³

A transfer to your mother’s spouse, at any time.
A transfer to a child who is under 21, blind, or permanently disabled.
A transfer to a sibling who already has an ownership interest in the home and lived there for at least a year before your mother entered the facility.
A transfer to an adult child who lived in the home for at least two years immediately before your mother was institutionalized and provided care that kept her out of a nursing facility during that time. States set their own documentation requirements, often including a physician’s statement that she needed a nursing-home level of care during those two years.

Outside these categories, any transfer for less than fair market value is treated as a gift and will trigger a penalty. Gifting the sale proceeds to children or other relatives is not a legitimate spend-down and will do the same.

Sell at Fair Market Value or Face a Penalty

Medicaid reviews every asset transfer made during the 60 months before a long-term care application. A sale below fair market value during that window is treated as a partial gift and creates a period of ineligibility.³

The penalty is calculated by dividing the uncompensated amount by the state’s average monthly cost of private-pay nursing home care. If the state’s monthly divisor is $10,000 and the home sold for $80,000 below fair market value, the penalty runs eight months. During those months your mother would have to pay privately for her care.

Because everything turns on the sale price, the valuation matters. A property tax assessment is generally not enough; many jurisdictions assess below full market value. A formal appraisal by a licensed real estate appraiser is the safest documentation. Some states also accept a comparative market analysis from a broker or documented comparable sales, but an independent appraisal is the strongest defense if Medicaid questions the price. Pressure to sell quickly at a discount is the exact scenario that creates a penalty. Investing in basic repairs and pricing at market value is almost always the better path.

Spending the Proceeds Without Creating a New Problem

After closing, the proceeds have to come down to the resource limit before Medicaid will resume paying. What she spends on decides whether the spend-down goes smoothly.

Paying privately for her nursing home care until the balance reaches the asset limit. This is the simplest path and raises no questions.
Medical costs insurance doesn’t cover, including dental work, hearing aids, eyeglasses, prescriptions, and durable medical equipment.
Paying off her legitimate debts, such as a remaining mortgage, credit card balances, or a car loan.
An irrevocable funeral trust or prepaid burial plan. Most states cap the exempt amount, often around $15,000, so check the state limit before purchasing.
A personal care contract with a family caregiver. The contract must be prospective, priced at local market rates, and based on the recipient’s life expectancy, with detailed records of services performed. Payments are taxable income to the caregiver.

Gifts to family are not on this list. Medicaid treats them as uncompensated transfers and imposes a penalty period.

Tax on the Sale

A federal income tax bill is possible, but a rule aimed at nursing home residents helps. A homeowner can normally exclude up to $250,000 of gain from the sale of a principal residence, or $500,000 for a married couple filing jointly, if they owned and lived in the home for at least two of the five years before the sale.⁴

For someone in a facility, the two-year use test is often hard to meet. Federal tax law provides relief: if your mother became physically or mentally incapable of self-care, any time she spends in a licensed care facility counts as time using the home as her principal residence, as long as she owned and actually lived in the home for at least one of the five years before the sale.⁴ A parent who moved into a nursing home three years ago can still qualify for the full exclusion. Any gain above the exclusion is taxed as a capital gain, and the tax itself is a legitimate expense payable from the proceeds without a Medicaid penalty.

If She Has a Living Spouse, Stop and Get Advice

A spouse changes the entire analysis. Medicaid cannot recover from an estate while a surviving spouse is alive, and the home remains exempt as long as the community spouse lives there.⁵ Selling ends both protections at once.

Federal law also protects a slice of the couple’s combined assets for the spouse who stays in the community. For 2026, the Community Spouse Resource Allowance ranges from $32,532 to $162,660, depending on the state.¹ Assets within that allowance are set aside for the community spouse and don’t count against the institutionalized spouse. If the house is the couple’s main asset, selling and spending down can leave the community spouse with far less than simply keeping the house would. Don’t sell in this situation without an elder law attorney’s guidance.

What Happens If You Don’t Sell

Holding the home protects Medicaid eligibility during your mother’s life, but it doesn’t eliminate the cost of her care. Federal law requires every state to attempt recovery from the estates of Medicaid beneficiaries age 55 and older for nursing facility services, home and community-based services, and related hospital and prescription drug costs.³ If the house is still in her estate when she dies, the state can file a claim against it to recover what Medicaid paid.

Recovery is blocked while certain family members survive her: a spouse, a child under 21, or a child of any age who is blind or disabled.⁵ States must also offer hardship waivers. Federal guidance points to homes of modest value relative to the county average and income-producing property such as a farm or family business that supports surviving relatives.⁶

So the real choice usually isn’t sell or don’t sell. It’s whether selling now, transferring to an exempt person, or holding the home through her lifetime leaves the family in the best position once care costs and estate recovery are both counted. That comparison is worth running with an elder law attorney before the house goes on the market.

1
Centers for Medicare & Medicaid Services (CMS). 2026 SSI and Spousal Impoverishment Standards
2
U.S. Department of Health and Human Services ASPE. Medicaid Treatment of the Home: Determining Eligibility and Repayment for Long-Term Care
3
Office of the Law Revision Counsel. 42 U.S. Code 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
4
Office of the Law Revision Counsel. 26 USC 121 – Exclusion of Gain From Sale of Principal Residence
5
Medicaid.gov. Estate Recovery
6
U.S. Department of Health and Human Services – ASPE. Medicaid Estate Recovery