My mother and I co-own a house (50/50) that is currently mortgaged. It's an investment property, so we collect rent income on it.

We're looking at transferring her interest in the property to me, for the purpose of cleaning up her assets so she can qualify for Medicaid.

I would like to pay my mother a fair value for her half of the property.

How do we calculate that, given that she's not only transferring me her part of the equity, but also her part of the debt, as well as her share of future earnings?

  • 1
    Your mother is already getting something in return for the loss of rental income: the ability to benefit from Medicaid. If that benefit isn't equal to or more than the future rental income, then why go on Medicaid?
    – chepner
    Feb 9, 2017 at 18:51
  • That's an excellent point Feb 9, 2017 at 19:46

2 Answers 2


The future earnings from the house are only relevant in as much as it affects what other people might be willing to pay to buy it. If you tried to account for them as well as the current value of the house, you'd be double-counting them, as someone who bought the house would implicitly also be paying for the right to receive those future earnings (or the choice to give up on them and live in the house themselves).

You should just get a fair assessment of the market value of the house, subtract the current balance on the mortgage to get the equity, and divide that in two.

You'll also probably need to refinance the mortgage to remove your mother from it.


We're looking at transferring her interest in the property to me, for the purpose of cleaning up her assets so she can qualify for Medicaid.

You may not be able to do that do that - there are rules regarding the transfer of assets before qualifying for Medicaid. If this is an investment property then her equity would be considered an asset. Transferring the asset would incur a penalty time during which she would not be eligible for medicaid. If you paid her fair market value, then the cash proceeds would also be an asset that could not be transferred without incurring a penalty.

Now if the proceeds were spent on, say, medical care, then you might be OK, but I would highly recommend talking to an attorney in your state to make sure you don't do something that bites you later.

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    Thank you for this. I was aware of these rules, and that's really why I'm asking this question. The thing is, we have a promissory note where she owes me money, for the time the house was previously mortgaged (50/50), and I paid it off myself. Our plan is for me to pay her for her share by cancelling an appropriate amount of that debt, but I need to know what the amount is. Feb 9, 2017 at 15:03
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    Find a realtor that can give you the fair market value of the house. If you don't know a realtor find one (or call an appraiser directly) that will do it for free or a small fee. Shouldn't be more than 300-400 dollars.
    – D Stanley
    Feb 9, 2017 at 15:07
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    @GTonyJacobs Definitely talk to an attorney. You might be able to structure the transaction as her agreeing to you foreclosing on that promissory note by surrendering her share of the property. A foreclosure can have some other advantages in terms of the date the asset is considered to have been transferred, provided that promissory note included a provision that her equity in the property was collateral. (I'm not a lawyer, but am aware of a situation where this turned out to be very advantageous.) Feb 9, 2017 at 16:31

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