Actually, a gift is better in terms of taxes than a payment for staying in the house. Gifts are never taxable to recipients. Gifts may be taxable to the giver, but only when they have given a total of $12.9 million of taxable gifts, which affects very few people. If, instead, your mother paid you to live in the house, that would be taxable income like any rental payments.
On the other hand, a large gift could cause your mother to be ineligible for Medicaid benefits should she need to move to a nursing home during the subsequent five years. Ongoing payments would not cause such a period of ineligibility.
Harry S. Margolis practices elder law, estate, and special needs planning in Boston and Wellesley, Massachusetts. He is the founder of ElderLawAnswers.com and answers consumer questions about estate planning issues here and at AskHarry.info.
