Core Insights - The article discusses the trend of younger generations, particularly Gen Z and millennials, acquiring homes from their baby boomer and Gen X parents at discounted prices, providing them with an entry point into the housing market [1][2]. Financial Implications - Kwame, a 23-year-old, is offered to buy his parents' home valued at $380,000 for $200,000, resulting in $180,000 in built-in equity, but he expresses concern about becoming house-poor despite the discount [2]. - The difference between the fair market value and the sale price is considered a gift of equity, which has implications for gift taxes, Medicaid eligibility, and mortgage structuring [3][4]. - The gift exceeds the $19,000 annual gift tax exclusion, necessitating the filing of IRS Form 709, although his parents may not owe taxes unless they exceed their lifetime exemption of $13.99 million in 2025 and $15 million in 2026 [4]. - Capital gains taxes are unlikely on the sale portion, as the gain should fall below the $500,000 exclusion for married taxpayers filing jointly, given the sale price of $200,000 [5]. - Kwame's cost basis in the home will be $200,000, which could lead to larger capital gains if sold later, but he may qualify for an exemption if it remains his primary residence [5]. Medicaid Considerations - The article highlights that Kwame's parents should consider the potential impact of the property transfer on their future Medicaid long-term care eligibility, as there is a five-year look-back period for asset transfers [6][7].

Core Insights - Long-term care costs, particularly for nursing homes, can significantly deplete retirement savings, with the national average cost for a semi-private room exceeding $94,000 per year [3] - Medicare offers limited coverage for nursing home stays, primarily for short-term rehabilitation, while Medicaid serves as a primary payer for long-term care, subject to strict financial eligibility criteria [4][3] - Medicaid eligibility is determined by income and asset limits, with individuals typically allowed no more than $2,000 in countable assets, and married couples having different asset retention rules [4][6] Medicaid Eligibility and Planning - Medicaid is a means-tested program, requiring individuals to meet specific income and asset thresholds to qualify for nursing home coverage [4][6] - Asset transfers to trusts or other entities can be strategies to qualify for Medicaid, but a five-year lookback period applies, scrutinizing any transfers made within that timeframe [7][8] - Proper planning, including the use of special trusts, home equity transfers, and annuities, can help protect assets from Medicaid spend-down requirements [8][9] Financial Advisory Role - Engaging a financial advisor is recommended for individuals planning for long-term care expenses, as they can provide guidance on eligibility strategies and asset protection [2][4][9]