Legal Question in Wills and Trusts in Massachusetts

My advice would be that you do not transfer any interest in the property without working with an experienced elder law and medicaid attorney. There are potential medicaid issues for your father, as well as inheritance/tax implications for his heirs. If you would like to discuss your situation with an experienced elder law attorney, please feel free to contact my office at 617-357-4898.

You've asked a good and important question. Unless you and your sisters have lived in the property two years out of the past five, you would be subject to capital gains tax on your share of the proceeds of the sale, with the tax basis being whatever your parents paid for the property way-back-when. Your father would receive a share of the proceeds based on the percentage of ownership he retains. It would be a very good idea to sit down with an elder law attorney and crunch the numbers before you put the house on the market.

Circular 230 Disclosure: Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

Ms. Golden;s answer is correct. You and your sisters might be able to do a 1031 exchange depending on the facts. You should meet with an elder law attorney to determine your options here. You need to be careful not to invalidate the 5 year look back rule and deprive your father of medicaid coverage in the future if needed.

Please feel free to contact me.