I have "sold" my car to my grandson after buying a new one for myself. Will that count as taxable income?

Jessie, not true. If she sold the car to grandson for less than the car was worth, any difference between the price grandson paid and the book value of the car at the time of purchase is considered a "gift" and held against her if she applies for Medicaid/MediCal in California. The 5 year lookback won't start until she applies for MediCal so if it takes him 3 years to pay off, this could be very sticky in terms of a possible transfer penalty. You have to prove that (1) asset was sold for fair market value (2) if paid as a loan that you charged a nominal interest (3) the transfer didn't happen within the 5 year lookback. When she transfers the title to the grandson, they will have to report how much the car was sold for in order for the tags to be purchased on car. Lots of states let you do that as $10 transfer and not have family member pay sales tax on car sale. If you don't declare the total $$ of the car sale when you change over title and it's less than the asset value, Medicaid will consider it a gift. Had a family member in California go through this. If you are selling a car to family member, and you might be filing for state aid soon, keeping the asset in your name is a liability in terms of car accidents and transfer penalties.

No, selling the care shouldn't be considered income as long as you sold it for less than you paid for it. You are just recouping some of the value on the used car. The money would be considered an asset if you still have some of it if you need to apply for Medicaid or some other service, but it won't be income.

Good idea, keep the receipts, because Medicaid will want them.

I have kept receipts for all payments on the car and even for the insurance payment.

Thank you for the answers to my question. It is good to know I'm only allowed one car and I hope by the time I would need Medicaid he will have paid for the car in full and I can sign the title over to him. Now I need to know how to account for the money. I'll also have the same problem when a son is going to buy a wheel chair carrier from me and pay almost full price (in monthly payments )for it as It was only used by me to transport my husband's wheel chair for a few months after buying it.

AND Medicaid only allows you ONE vehicle. Now you have two titled in your name.

Medicaid will consider the car an exempt asset while you are alive and the car is still titled to you. BUT at some point you will transfer the title to him and Medicaid will want proof of where the money went.