Loan to elderly mother
I wish to loan approx $30,000 to my 78 year old mother to help her purchase s condo. If I do this will she have to pay taxes on it?
Also, if she became ill and had to go to a nursing home and ended up on Medicaid, upon sale of the condo would I as a crediotr be able to collect on the loan or would Medicaid take the proceeds of the sale?
Any other considerations you can suggest?
1 Answer from Attorneys
Re: Loan to elderly mother
A loan is not taxable income. However, you should take a mortgage (or second mortgage) against the condo being purchased to preserve your rights. If monies are paid to you in repayment of the loan, the IRS will treat a portion of the payment as interest income to you, resulting in imputed income where there is not a stated repayment rate in the loan document. If you document the transaction properly (that is record a mortgage) then if she is on Medicaid, you will have preserved your right to collect the debt due you.
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