Q: We have heard that if we sell our property and buy a house in another city that the IRS or someone will take it if we
die before three or five years. Is this true? The doctor has told me to move closer to our son so he can help me with my husband who has dementia and Parkinson disease. What can I do? We now live in Hamby, Texas in Shacklelford County. Clyde is in Callahan County.
A: You heard wrong. If you have lived in your current home for two of the past five years, you will not owe the IRS any capital gains tax when you sell it. If you use the net sale proceeds to buy a new home and live in it, it will be your home and not counted in determining financial eligibility for Medicaid should one of you someday need Medicaid. In addition, in Texas, you can pass your home outside your Will and so outside of the Medicaid Estate Recovery Program by using either a "Lady Bird" Deed (a General Warranty Deed with Extended Life Estate) or a Texas Transfer on Death Deed. Ask a local elder law attorney to help you get all your ducks in order.
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