Impact of Selling a Home While Receiving VA Pensions such as Aid & Attendance or Housebound

Impact of Selling a Home While Receiving VA Pensions such as Aid & Attendance or Housebound

In order to be eligible for the Department of Veterans Affairs (VA) pension benefits, such as the basic, aid & attendance, and housebound pensions, there are income and net worth (assets plus income) limits that must be met. Generally, one’s home is an exempt (non-countable) asset, but what happens if the home is sold after approval for VA benefits? Will the proceeds from the sale cause disqualification of benefits? Is there a way to protect the proceeds of the sale and still qualify for benefits?

If a veteran lives in their home, the home and land on which it sits (up to 2 acres) is exempt. This means it is not counted as an asset towards VA pension eligibility. If a veteran does not live in their home and rents it out, rent payments are counted as income, and the value of the home is generally considered an asset. However, if a veteran does not live in the home, does not rent it out, and intends to return to the home, it is considered an exempt asset. For VA purposes, when a veteran has moved into a care facility, such as an assisted living facility, a memory care unit, or a nursing home, it is assumed there is “an intent” to return home. Therefore, the home remains exempt.

Impact of Selling a Home While Receiving VA Pensions such as Aid & Attendance or Housebound

A VA look back rule was implemented on . Before this, a veteran could realistically sell their home prior to applying for VA pension benefits, give the proceeds to their child, and still be eligible for benefits. This is no longer allowed. In simple terms, the “look back” is a period of 36-months immediately preceding one’s VA application in which the VA scrutinizes all asset transfers to ensure no assets were given away or sold for less than fair market value. If this has been done, it is assumed it was done to meet the VA’s net worth limit. Violating the look back period causes VA benefit ineligibility for as long as 5 years. As a side note, gifting one’s home or selling it under fair market value can also disqualify one from Medicaid long-term care benefits due to Medicaid’s 60-month look back period.

Any asset transfers made prior to the implementation of the VA look back rule on does not violate the look back rule. Furthermore, effective 12/1/21 – , if a veteran’s assets do not make their net worth exceed $138,489, gifting assets or selling them for less than they are worth no credit check payday loans Kingsport TN does not violate the look back rule.

Also implemented in , the VA established a 2-acre limit on which the home sits. An exception exists if any extra acreage is not sellable. Reasons it may not be sellable include it being only slightly over the 2-acre limit, there is an inaccessibility issue, and zoning limits prevent the land from being sold. This means if a veteran has a home on 6-acres of land and the extra acreage is sellable, under the new rule, 4-acres of land is non-exempt. Therefore, it would count towards the veteran’s net worth.

What Happens to My VA Benefits If I Receive Cash from a Home Sale?

It is not usually recommended that a veteran sell their home while receiving VA pension benefits. Instead, it is usually suggested that the home be sold after the death of the veteran. Remember, one’s home is considered to be an exempt asset by the VA. This is true even when the individual resides in a nursing home or assisted living facility, as there is an assumption the veteran has “intent” to return to the home.

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