Reviewed by the financial planning experts at ElderLife
Many older adults’ homes are their largest financial assets. So, when care needs increase, families often wonder whether selling the house is the only way to afford assisted living, memory care or other long-term care options.
At the same time, the family home usually holds decades of memories – making the decision emotionally complicated, not just financially challenging.
Understanding the full range of financial options helps families approach this difficult decision with confidence. Use the questions below to better understand your family’s options and navigate the decision to sell a home to pay for senior living.
1. Does your parent need residential senior care?
Before deciding how to pay for care, many families start by considering – or confronting – what level of care their parent needs or how their life might improve with daily support.
Ask yourself the following questions:
- Does your parent need help with daily activities, such as bathing, getting dressed or mobility?
- Do they spend time socializing with others, or do they mostly stay by themselves?
- Do they use all parts of their home, or has their routine narrowed to just one or two rooms?
- Can they still grocery shop and cook independently?
- Do they drive, or do they rely on family members for transportation?
- Does the home present safety concerns, such as stairs, fall risks or maintenance challenges?
If these questions raise concerns about safety or quality of life, it may be time to explore senior living options.
2. How much will senior care cost?
Once families have a clearer picture of the care their parent needs, the next step is to estimate the potential cost.
Typically, higher levels of care mean higher costs. Other factors also contribute to price, like the geographic location, the community itself and other services a resident or their family may want that aren’t included in the monthly rent or care services.
The level of care often determines whether existing income and savings can cover costs or whether families may need to consider additional resources such as home equity.
If you determine that the cost of care in senior living is greater than the sum of the other available resources, selling the home and using the proceeds is just one way to fund the care.
Next, we’ll review many ways families pay for care in addition to a home sale.
3. What are the options to pay for senior care?
Many families initially assume selling the home is the only way to pay for care. In reality, it’s usually one of several possible funding sources.
Families commonly use a combination of resources, including:
- Savings and investments
- Social Security income
- Retirement accounts such as pensions or IRAs
- Long-term care insurance
- Veterans benefits (surviving spouses may also qualify)
- Life insurance policies
- Loans or bridge financing
- Proceeds from selling the home
For many families, the home is the largest financial asset, which explains why selling it often comes up in the conversation.
Every family’s financial situation is different, and there is rarely a single “right” answer.
4. When should you consider selling a parent’s home?
Families often consider selling the home if:
- A parent plans to move to an assisted living or memory care community
- The home would otherwise sit vacant
- Maintaining the home has become difficult or unsafe
- Home equity is needed to help cover the cost of care
For many families, this step can feel bittersweet. The home may represent years of family memories, holidays and milestones. And yet, it’s also comforting that the home equity their parents gained over decades of homeownership will continue to support them in a comfortable, safe environment.
For example, an older adult who does not have access to veteran benefits or long-term care insurance – and who finds that their Social Security income and retirement accounts wouldn’t cover the full cost of care – may consider selling the home to fill that gap.
Similarly, those with continually increasing care needs may opt to sell the home to ensure they have enough money to pay for care as their needs evolve.
5. Will selling the home help fund long-term care?
If a family decides to sell the home, reviewing a few financial details first can prevent surprises later.
Start by understanding the home’s mortgage status, whether traditional, reverse or no remaining loan balance. This information affects how the sale proceeds will work.
For example, reverse mortgage lenders often require repayment once the homeowner no longer lives in the property.
Tax considerations
If the home sells for more than its original purchase price, capital gains taxes may apply in some situations. Because tax rules can be complex, many families speak with a tax professional or financial advisor before moving forward.
If the family understands the financial considerations of selling the home and how they may affect their ability to fund care, they can better decide whether it’s appropriate for their situation.
Final questions to help streamline selling the home
If you think that selling the home could be a viable option to help pay for senior care, here are a few other helpful questions to ask to ensure a smooth process and transition to senior living.
Who needs legal authority to sell the home?
One important question involves who will manage the sale of the home. If a parent still feels comfortable managing financial decisions, they may choose to handle the sale themselves with the help of a real estate professional.
However, health concerns or memory changes sometimes make financial decisions more difficult. In those situations, a trusted family member may need to step in.
Many families work with an attorney to establish a financial power of attorney (POA). This legal document allows a designated person to manage financial matters, including selling the property when necessary.
Planning ahead can make these decisions much easier if circumstances change later. When families decide how the process will be handled, they can have a clear sense of whether and how to sell the home.
Who will be involved in downsizing and moving?
Even families who have sold homes before often find that selling a parent’s home during a move to senior living brings unique challenges. Beyond listing and selling the property, families must also deal with downsizing and the belongings in the home.
Sorting through decades of belongings, downsizing possessions and preparing the home for sale can feel both physically demanding and emotionally difficult. Throughout the process, involving your parent in decisions whenever possible can help preserve their sense of control and dignity during a major life transition.
Considering the steps involved and which family members or hired professionals can contribute to the downsizing process can help a family have a firm grasp on how to proceed.
How will you find the right senior living community?
Once families decide that a move to senior living makes sense, choosing the right community is the next step. When visiting communities, families often look for:
- A welcoming, well-maintained environment
- Staff members who communicate clearly and respectfully
- Programs and social opportunities that match their parent’s interests
- Positive feedback from current residents and families
Taking the time to visit communities and ask questions can help families feel more confident about their decision.
At Atria Senior Living, we work with families every day who are navigating these same questions. Staff members help families understand care options, compare costs and explore whether senior living may be more affordable than they expect.
Families can also use Atria’s affordability calculator to compare the cost of senior living with the cost of remaining at home with support services.
Deciding whether to sell the home when moving to senior living
Many families eventually face the decision of whether to sell a parent’s home to help pay for long-term care.
For some, home equity becomes an important part of funding care. For others, different financial resources allow them to delay or avoid selling the home.
By understanding care needs, reviewing available financial resources and considering other important logistical aspects of the process, families can make a thoughtful decision that supports both their parents’ safety and their long-term financial well-being.
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