Ask Thomas Mitchell: How Can We Pay For My Relative To Go Into A Nursing Home?
Video Summary
Good afternoon. I’m Tom Mitchell, one of the partners of Waller & Mitchell, and one of the things that I do is practice elder law, and one of the main questions I get fairly frequently about elder law is, “I have a family member who’s going to a nursing home. How are we going to pay for it?” And that’s a serious question with nursing home costs running anywhere from $6,000.00 to $8,000.00 a month.
There are some public assistance programs to help pay for the nursing home care of an individual, and that’s the government that we’re talking about so they define indigency a little bit different than you and I do.
For a married couple the spouse who’s staying at home can have approximately $120,000.00 of liquid assets. The spouse going into the nursing home can only have $2,000.00 of liquid assets. The spouse going into the nursing home also cannot have monthly income of more than $2,025.00 a month. If there is more income than that, we have to set up a special trust to capture that income and pay it to the spouse or the nursing home.
Basically what happens is the nursing home spouse’s income is paid first to the spouse staying at home to make sure they’re not impoverished. Then the nursing home person gets to keep $35.00 for personal expenses – toothpaste, hairbrush – and then the balance of the income is paid to the nursing home. The rest of the expenses of the nursing home is paid by the state through the Medicaid Program.
So there in a nutshell is how you can help pay for the nursing home care of an individual in your family who may have to go.
Once again, this is Tom Mitchell, one of the lawyers of Waller & Mitchell. Our telephone number is 727-847-2288.
- Published in Medicaid Planning, Videos
Do I Have To Pay Taxes On Long Term Capital Gains?
Video Summary
Do I have to pay taxes on long-term capital gains? The answer is yes, you do have to pay taxes on long-term capital gains. But the good news is that the long-term capital gain rate at this time is 15 percent. It may be phased out with the Bush tax cuts at the end of this year, so that’s something that you need to be cognizant of. If you want to make a deal to sell it, you may take advantage of the 15 percent rate- it may not be here forever. Ordinarily, your long term capital gain rate is half of what your ordinary tax rate is.
If you have long-term capital losses you can offset them against the gains. However, long-term capital losses cannot be taken all in one year and offset against ordinary income. I think you’re limited by $3,000.00 a year and need to carry it over year to year, but that’s something you can discuss with the accountant. Carrying over those long-term capital losses can be a problem.
Long-term capital gain versus short-term capital gain: short-term capital gains are taxed at your same tax rate versus the reduced rate for long-term capital gains, again, offset by short-term capital losses. So if you’d like to discuss this, give me a call at (727) 847-2288.
If I Short Sell My House, Do I Have To Pay The Lender The Difference?
Video Summary
If I sell my house, do I have to pay the difference to my lender? I’m going to give you a “lawyer answer” because it’s not always the same with every transaction. It’s transaction and borrower-specific. The usual case is that if you have a short sale, the lender usually forgives any difference between the amount that they receive from the sale of the property and what is owed. And a lot depends also on whether it’s a first mortgage versus a second mortgage. With second mortgage holders, some of them will not agree to forgive the difference and that can be treated a couple of ways.
Sometimes they require the borrower in the short sale to sign a promissory note for a certain amount of money. It may not be for the full amount or they may negotiate a lump sum amount, which they will accept to forgive the difference. With second mortgage lenders, a lot has to do with who the lender is. There are certain banks that will not release you from liability and they will release the property from their lien; however, they will continue to hold you responsible for that amount. Whether or not they sue you or bring a lawsuit for the difference, that remains to be seen. Usually, if they do, the amount can be negotiated to a probably $0.10 to $0.20 on the dollar as to what you owe if you can work out a lump sum payment.
Also, you must remember that if they do forgive your loans, they can issue what they call a 1099-C, which is a report to the Internal Revenue Service that they forgiveness of debt is considered income. If this is on your primary residence then you can probably avoid paying any taxes. If you’re taking a loss on your rental property, then you can avoid having to pay taxes by filing the tax return and having a basis higher than what they amount that you sold the property for, so that you have a loss on the property that offsets the gain. So whether or not they forgive the debt or not depends on your particular circumstances, particularly if you have the ability to pay. If you show a nice fat financial statement or good income, they’re more likely to order you to make a contribution at the closing as far as the unpaid balance. So if you have any questions about that, you can give me a call at 847-2288. Thank you.
- Published in Real Estate - Foreclosure, Videos
Do I Have To Pay Taxes On My Short Term Capital Gains?
Video Summary
Do I have to pay taxes on short-term capital gains? The answer is, “Yes, you do.” The question should probably be rephrased as, “At what tax rate?” Well, it’s my understanding that if you have short-term capital gains, you have to pay at your ordinary tax rate. Also, what do you mean by “capital gains”? That usually has to do with whenever you sell property under the Code Section 1031 property, which is property that’s held for business or investment purposes.
If you only hold it for a short period of time, then it’s considered a short-term capital gain and you can offset your short-term capital gain against your short-term capital losses (hopefully you don’t have any of those.) But you can see how that could work because if you were buying and selling houses, you buy a house, you fix it up, you turn around and sell it in a matter of three or four months and you make money on it. That would be considered a short-term capital gain and taxable at your ordinary rate.
Now, short-term capital gain versus a long-term capital gain: I believe the holding period is for one year. So if you hold your property for long enough to qualify for long-term capital gains, long-term capital gains are taxed at a rate of 15 percent. Now, that Internal Revenue Code provision may be being phased out this year. I think that was under the Bush tax cuts, but I could stand to be corrected. These are more something that you could talk to your accountant about. But if you hold investment property for more than a year, then when you sell it you can take advantage of the long-term capital gains.
Now, whenever you sell your home, however, if you lose money on it no matter how long you’ve had it, you don’t get to take any loss on the sale of your house since you don’t hold that for the sale of business or it’s not an investment; whereas if you sell your home and you make a gain on it, you can exempt gains up to $250,000.00 if you lived in the house two out of the past five years. Let’s say that you didn’t live there for that period of time and you had a gain. Well, then you didn’t hold it for more than a year and sold it and had a gain. Then it would be a short-term capital gain, which you’d have to pay ordinary income for.
So if you have any questions about buying and selling your property and short-term capital gains, give me a call at (727) 847-2288. Thank you.
If I Have a Homestead Exemption in Florida, Can My Spouse Hold a Homestead Exemption in Another State?
Video Summary
If I have a homestead exemption in Florida, can my spouse hold a homestead exception in another state? The answer is, “No,” because if you’re husband and wife, the property appraiser determines that it is a family and therefore you’re saying that the family has their homestead or permanent residence in Florida if you have a homestead exemption. Whenever you sign the application for homestead, you say that you don’t have an exemption in another state and that goes for your spouse.
It’s even more difficult whenever people are going through a divorce proceeding and they’re not divorced and they’re separated for some time and they’re not going through a divorce proceeding, whether or not both spouses can obtain a homestead exemption. I know that our local property appraiser, Mike Wells in Pasco County, is really tough on this and in fact investigates any number of people who apply for a homestead exemption to determine whether or not they have homestead in another state. If they do, then he slaps a homestead lien against their property for all the exemptions they received.
I don’t know how other property appraisers are as far as investigating this, but if your spouse is getting homestead in another state, then I don’t suggest you try and get homestead in Florida because if you get caught, the homestead exemption penalties are quite severe. He puts a lien against your property for all these back-due taxes. So I would talk to the property appraiser of you do want to try and do that and ask them before you apply for a homestead exemption here in Florida in your name. If you have any other questions, give me a call at 847-2288. Thank you.
- Published in Real Estate, Videos