Overview of Assisted-Living Real Estate Options

When a parent moves into assisted living, the “right” choice:—sell the house, keep it, or clear the estate—depends on finances, legal authority, care costs, and long‑term plans. Most families ultimately sell the home because assisted‑living costs are high and home equity is often needed to pay for care. If Medicaid is going to be part of the equation, there are special considerations about when to sell the house.


Below is an introduction to considerations as you think through the decision. Courtesy of CoPilot AI analysis of Elder Law websites. 


DISCLAIMER: This is not intended to be legal advice.    This is provided to help potential real estate clients as they enter into this transition from living at home, to living in an Assisted Living Facility.  Please consult with an Estate Attorney on all legal matters.

 


🧭 Step 1: Understand the Financial Reality

Assisted living is expensive. National averages range from $4,800–$5,200 per month in many regions.


Most seniors rely on home equity to fund multi‑year care needs—over 70% need it to pay for long‑term care.

If your parent cannot afford care without the home’s value, selling becomes the most practical option.

 


🏠 Step 2: Evaluate Your Three Main Options


Option 1 — Sell the House (Most Common)


Best when:

  • Your parent needs the equity to pay for care
  • You want to avoid ongoing maintenance, taxes, and insurance
  • You want to simplify the estate

Pros:

  • Provides immediate funds for assisted living
  • Reduces financial strain on family
  • Simplifies long‑term planning

Cons:

  • Emotional difficulty
  • Requires legal authority (Power of Attorney) if the parent can’t sign documents
  • May affect Medicaid eligibility due to the 5‑year look‑back period

 


Option 2 — Keep the House (Rent It Out or Hold It)


Best when:

  • The parent may return home
  • The family wants to preserve the asset. (Medicaid )
  • Rental income could offset care costs

Pros:

  • Generates monthly income
  • Property may appreciate
  • Keeps options open

Cons:

  • You must manage tenants, repairs, taxes
  • Rental income often does not cover all care costs


 


Option 3 — Clear the Estate but Keep the Home Vacant


Best when:

  • You need time to make decisions
  • The family is emotionally not ready to sell
  • You’re preparing for probate or future sale

Pros:

  • Low‑pressure way to sort belongings
  • Allows time to coordinate legal and financial planning

Cons:

  • Ongoing costs with no income
  • Vacant homes require insurance adjustments
  • Delays access to funds needed for care

 


⚖️ Step 3: Legal Considerations


  • Power of Attorney is required if you need to act on your parent’s behalf in real estate matters.


  • If your parent has cognitive decline, you may need guardianship before selling.


  • Capital gains rules may favor selling while the parent is still living in the home, allowing up to $250,000 exclusion on gains.

 


💡 Step 4: Emotional & Practical Considerations


This is one of the hardest transitions adult children face. Guilt, grief, and overwhelm are normal.


Many families choose to:

1.   Clear the home gradually,

2.   Sell once the parent is settled,

3.   Use proceeds to fund care,

4.   Preserve sentimental items,

5.   Document everything for estate purposes.

 


🧩 Quick Decision Guide


   Situation   Best Option

    Parent needs funds for care - Sell the home


   Parent may return home -  Keep the home


   Family needs time to decide -  Clear the estate, hold temporarily


   You want passive income -  Rent the home


   Medicaid planning needed -  Consult elder-law attorney before selling

   


 See 'When Medicaid is Part of the Plan"