Can I Sell My Home to Pay for Assisted Living? What Seniors and Families Should Know

The simple answer is yes. How it could affect health insurance benefits you have and/or Medicaid is not simple.

For many seniors, the home is more than just a roof over their head—it’s a nest egg built over decades. But when it’s time to transition into assisted living, that home might need to become a financial resource. The question is: Should you sell it? And if so, what are the pros and cons?

This article walks you through the financial considerations of selling a home to help pay for assisted living, including how it may affect benefits like Medicaid. (And don’t worry—we’ll point you to the professionals who can guide you through the legal and financial stuff too.)

One of the most complicated yet important factors to consider is how it may affect Medicaid benefits. The home is exempt from counting as an asset unless sold. If you have lived in the home for two years out of the last 5 years any proceeds from the sale would be exempt from capital gains tax. state has it own asset limits with Illinois and Missouri having limits of $2,000 for an individual and $3,000 for a couple.

Since we are not attorneys or Medicaid specialists we suggest contacting the official Medicaid agencies for your state.

In Illinois the official website is: ILLINOIS.gov
In Missouri the official website is: Missouri Dept of Social Services

If Medicaid is not a concern for you then here are the pros and cons of selling for cash.

1. Access to Cash for Care

Selling the home can provide immediate funds to help cover assisted living expenses, which can run anywhere from $4,000 to $8,000 per month depending on where you live and how much care is needed.

2. No More Property Expenses

Say goodbye to utility bills, property taxes, repairs, and homeowner’s insurance. That money can now go directly toward care instead of upkeep.

3. Simplifies Estate Planning

Selling the home during the senior’s lifetime means one less asset to handle during probate. It can also prevent future disputes and make transitions smoother for family members.

4. Flexibility and Freedom

Having cash on hand opens up options—whether it’s choosing a private-pay assisted living community, moving closer to loved ones, or funding in-home care in a rental before transitioning fully.

1. It Could Affect Medicaid Eligibility

Let’s first clear this up: 

Selling your home will NOT affect Medicare. Medicare is not income- or asset-based.

But Medicaid is a different story. If a senior sells their home and receives a large sum of money, that can disqualify them from receiving Medicaid benefits—at least temporarily—until the money is spent down.

💡 If Medicaid is part of your long-term care plan, talk to a Medicaid official or elder law attorney before you sell the home.

2. You Might Owe Capital Gains Tax

If the home appreciated significantly over the years, there could be taxes owed on the profit. The good news? Most seniors qualify for the $250,000 IRS exclusion (or $500,000 if married) on capital gains if the home was their primary residence for at least two of the past five years.

Still, it’s smart to run the numbers with a tax professional.

3. Once It’s Sold, It’s Gone

Selling the home converts a tangible asset into liquid funds—but it also means there’s no property to fall back on. If a senior outlives their savings, they could find themselves needing to qualify for Medicaid or other support. Again: plan ahead.

MedicaidPlanningAssistance.org is a free service provided by the American Council on Aging

National Academy of Elder Law Attorneys (NAELA) Find an expert in Medicaid planning, estate issues, and long-term care transitions.

National Association of Personal Financial Advisors (NAPFA)

Search for fee-only professionals who specialize in retirement and senior planning.

BenefitsCheckUp by NCOA.
See what programs and benefits you’re eligible for—free and easy to use.

Medicaid.gov
For state-specific Medicaid rules and eligibility guidelines.