My mother wants move out of her large house and into an apartment. She wants to move to section 8 housing which has lower rents, but first must get rid of all her assets to qualify.

Is it legal for her to transfer her house to me so, on paper, she will have no assets? Does a certain amount of time need to pass before she could be section 8 eligible? The house in question is located in Maryland, while I am located in California.

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    Not going to harp on the moral side of doing this, but I'd also consider that you might have to pay gift tax on the house. I wouldn't be surprised if the authorities would look into any sort of asset disposal within a certain period prior to your mother applying for section 8 housing. – Timo Geusch Dec 25 '11 at 18:33
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    If its "on paper" then its most likely illegal. I wouldn't take that path if I were you. – littleadv Dec 27 '11 at 8:36
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    Not to mention, just straight up immoral. Hiding assets to extract taxpayer money from a program for the poor?!? There's a word for using deception to trick people into giving you money - "con". The word you'll hear in court is "fraud". – Patches Dec 30 '11 at 12:21
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    @frankadelic She's transferring it to you to qualify for a program for the poor while still leaving you an inheritance. That's hiding assets. Look, I understand that desire. Everyone wants to leave a little something for their kids. But the fact is she can provide for herself. Making the taxpayer pay her living costs so she can leave her wealth to you is wrong. Welfare is meant for people who have nowhere else to turn to. She does. – Patches Jan 3 '12 at 17:13
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    @frankadelic - she could sell the house and pay for rent for a long, long time out of the proceeds. Depending on how the numbers worked out, she could very well be able to pay that rent just from interest on that money, and still be able to leave you a nice sum when she passes on. Example: if the house goes for $250K, applying the "4% withdrawal rule" gives her $833/month for rent, increasing for inflation, and leave that $250K untouched. Or, she could sell the house to you and carry the note, which, at 4% and 30 years, means you'd be giving her $1193/month in principal & interest. – Patches Jan 3 '12 at 17:23

Your mother's proposal is fraud.

Once your mom liquidates her assets by transferring them to you, she'll get on a Section-8 list if her income is less than like $26,000-30,000/year. In some areas, the waiting list is long, and prioritized for families. If she falsely reports that she doesn't own her home, she'll get disqualified for lying. If she transfers the home to you and rents it at a below market rate, she is falsifying her application by not reporting income.

What happens next is that she will need to enroll in Medicaid. Medicaid does a multi-year lookback, and they will notice that you bought her house for $1. Once that happens, the Feds and the local Social Services department will be looking to you to pony up for the housing, food, and medical benefits. Best case scenario, you're writing a big check for money you don't have. (ie. You'll be paying alot of taxes on the house sale) This is also a crime.

The best thing that your mom can do is to just sell her house, spend down her money on rent and living expenses, and enroll in safety net programs if and when she needs to. She should be able to find a good apartment for seniors that has rent linked to income. It's nice that she wants to leave some money to you, but committing a crime to do so is a not-so-good idea.

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  • One clarification: She would not sell the house for $1. She would file a quitclaim deed, transferring the property to me. At that point, I would be responsible for property tax, maintenance, etc. – frankadelic Jan 3 '12 at 5:48
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    @frankadelic I don't think the distinction between selling the house to you for $1 versus transferring the property to you by quit claim deed will be considered any differently.// This transfer is not payment for an outstanding debt she owes you, and for which you have ample documentation? – Ellie Kesselman Jan 3 '12 at 22:12
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    @frankadelic Look-backs cover all asset transfers, and the State/county will want to recover FMV – duffbeer703 Jan 5 '12 at 4:44

This is the Section 8 information page for elderly persons. It includes low-income housing, and other ways of lowering costs for elderly people, with links to options that vary based on location.

Let's say that your mother were to transfer her home to you, by sale or otherwise. Does your mother have other assets e.g. mutual funds? This could disqualify her for Section 8 housing.

Section 8 eligibility is also based on income. Does your mother receive Social Security benefits or an annuity? These are the latest HUD income limits for Fiscal Year 2012, by state, county and zip code.

The criteria for Section 8 housing eligibility varies regionally. The supply is not uniform throughout the U.S. Usually there are waiting lists and prioritization for families.

EDIT The best thing would be to inquire directly. Contact HUD or the local public housing authority. The links above give phone and email contact info for Maryland. You won't get in trouble for asking. You'll receive an accurate response, straight from the source. Then you can decide whether or not this is a legal, ethically acceptable plan for you and your mother.

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    I'd also consider spending a few hundred on a lawyer. – user296 Dec 29 '11 at 2:09
  • @fennec Yes! Exactly. Although it might not be so easy to find a lawyer who has familiarity with Section 8 housing law. How many Section 8 applicants can pay attorney retainer fees? I'm sure there are plenty of attorneys familiar with the law, but I'd guess they have construction companies (HUD housing builders) and HUD itself as clients. But I'm only guessing, and that is worth trying, for sure! – Ellie Kesselman Dec 29 '11 at 2:12
  • Don't call HUD, call the local Housing Authority or whomever administers Section 8. This is usually tied to a city, county or regional organization. Talking the local folks may make you aware of local programs designed to help keep seniors at home as well. – duffbeer703 Dec 30 '11 at 22:33

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