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Topic: Long Term Care

My mother and father live on CPP and a small disability income (my father's).

My father is terminally ill, but still living at home. Their small residence is mortgage free ($120,000). What happens to their equity in their home once one, or both of them have to move to a long term care facility? How can they have control over the equity in their home yet still receive government assistance?

Answer:

Thank you for your inquiry.

However, this does not appear to be an income tax question. While some government assistance programs base the financial assistance they provide on an individual's income as reported on their tax return, the Canada Revenue Agency itself does not make the assistance determination nor does it have an entitlement to the equity in your parent's home should they be required to move into a long term care faculty. How your parents' equity in the home is affected should they go into a provincially subsidized long term care facility is more likely a matter to be discussed with the provincial department providing them with government assistance.
 
From a tax perspective only, should they both be required to live in a long term care facility and cannot live in their home for health reasons, the property can still be designated as a principal residence for income tax purposes; thus drawing no capital gains consequences upon sale. However should the home be rented to produce additional income after they leave, there would some capital gains consequences upon sale.
 
We hope we have been of some assistance to you.