Elder Law Answers
Do I Need to Pay Income Taxes on My Social Security Benefits?
Many people do not realize that they may need to pay...
Read moreIf My Mother Pays Off My Mortgage, Do I Pay Taxes on That?
- June 21st, 2023
Q
My mom will be moving in with me due to age. She will be a permanent resident in my home. She wants to pay off my mortgage after she moves in. Would this still be considered a gift that would require me to pay taxes or just a payment from the occupant of the home?
A
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.
Last Modified: 06/21/2023