Selling a Home to Pay for Senior Care: What Colorado Families Need to Know
Paying for senior care for your mother or father can feel overwhelming. Are you wondering whether selling their home is the right step?
We get it. Making decisions about senior care is hard enough. Adding in the complexity of real estate can feel overwhelming—especially when emotions, finances, and family logistics all collide.
If you’re in Colorado and thinking about using home sale proceeds to fund assisted living or memory care, this guide is here to help. We’ll walk you through the must-knows—from timing to taxes to emotional support—so you can move forward with clarity and compassion.
When Is the Right Time to Sell a Home for Senior Care?
Every situation is different, but here are two common timing paths families take:
1. Selling Before the Move
This is ideal if the home sale is your primary funding source. It avoids double expenses (mortgage + senior care) and gives you more control over the process.
Consider this option if:
- Your loved one’s move isn’t urgent
- You have time to prepare the house for market
- They’re emotionally ready to downsize
2. Selling After the Move
Some families prioritize getting their loved one safe and settled first. This is common after a fall, hospitalization, or rapid health decline.
You might choose this if:
- The senior’s safety is at immediate risk
- The home needs work before listing
- You’re able to cover costs temporarily
Bridge loans may help in these situations, providing funds while the house is on the market.
Learn more about bridge loans from the Consumer Financial Protection Bureau.
Will Selling Affect Medicaid or Veterans Benefits?
Yes—and it’s crucial to plan wisely.
Medicaid Considerations
In Colorado, Medicaid has a $2,000 asset limit for individuals. A senior’s primary residence is exempt, but once sold, the proceeds count as assets.
That means selling could disqualify your loved one until those funds are “spent down.”
VA Benefits Impact
For VA pensions like Aid & Attendance, the 2024 net worth limit is $155,356. The home doesn’t count in this figure—but selling it will add to their assets and may affect eligibility.
Also important: both programs have look-back periods (3 years for VA, 5 years for Medicaid). Selling or gifting assets for less than fair market value during this time can create benefit delays.
Next step: Speak to an elder law attorney before listing the home.
Find a certified elder law attorney in your area.
What About Capital Gains Taxes?
In many cases, home sale profits are tax-free. But there are rules:
Tax-Free If:
- The senior owned the home
- They lived in it for 2 of the last 5 years
- Profit is under $250K (single) or $500K (married)
Taxable If:
- The home was a rental or second property
- It was sold for significantly more than the exclusion limit
- The senior didn’t live there recently
Tip: Consult a tax advisor to avoid surprises and keep more of the proceeds.
How to Navigate the Emotions of Letting Go
Selling a long-time home is about more than paperwork. It’s deeply personal. Here’s how to make the transition smoother:
1. Include Your Loved One
Even if they’re not handling logistics, involve them in decisions when possible. It honors their dignity.
2. Use Visual Tools
Tape out the size of their new room on the floor to help them imagine the new space and decide what to bring.
3. Label Belongings with Sticky Notes
Use different colors for what to:
- Keep
- Donate
- Pass to family
- Sell
- Store
4. Reframe the Move
Talk about the benefits of senior living: safety, friendships, activities, freedom from home maintenance.
5. Lean on Support
You don’t have to manage it all alone. A senior move manager or compassionate advisor can help.
Legal Considerations: Do You Need Power of Attorney?
If your parent is mentally competent, they can sign all documents themselves. If not, here’s what you may need:
- Power of Attorney (POA): Grants authority to act on their behalf. Must be established while they’re still competent.
- Guardianship: Required if there’s no POA and your parent can’t legally make decisions. This is a longer legal process.
Make sure any real estate POA is specific and durable to avoid closing delays.
A Helpful Checklist: Selling a Home to Pay for Senior Care
Here’s what to tackle step by step:
- Choose the right time to sell (before or after the move)
- Talk with an elder law attorney
- Consult a tax advisor
- Gather essential documents
- Deed
- Mortgage info
- Insurance policies
- Past appraisals
- Utility records
- Hire a senior-friendly real estate agent
- Schedule a pre-listing inspection
- Declutter and stage the home
- Explore bridge loan options if needed
- Set a timeline with clear goals
- Get emotional support for your parent—and for yourself
Need help? We’ll Walk With You
At Harmony Senior Referrals, we’re not just here to help you find care. We’re here to walk with you through each step—including the tough financial decisions.
1. Speak with a Local Senior Care Expert
We’ll learn your situation and explain your options in plain language.
2. Get Personalized Guidance
From care types to payment plans, we help you make confident decisions.
3. Find Peace of Mind
We’ll match you with trusted communities and support you from start to move-in.
FAQs:
How do I know if we should sell now or later?
If care is urgent, prioritize safety. If there’s time and support, selling first may reduce stress and costs.
Will we lose benefits if we sell the home?
Potentially, yes. It depends on assets and timing. Talk to an elder law attorney before taking action.
Can we use a bridge loan?
Yes. Bridge loans are short-term tools that let you access home equity before the sale closes.
How do we prepare emotionally for the sale?
Talk openly, involve your parent in small choices, and focus on the benefits of their new home.
Do all realtors understand senior needs?
No. Look for a senior real estate specialist or someone with experience supporting older adults and families.
You’re Not Alone
Selling a home to pay for care is a big step. But with the right plan—and people by your side—you can handle it with grace, confidence, and care.
Speak with a Local Senior Living Expert Today to start the journey with support you can trust.