Medicaid questions - purchasing from a relative through my LLC

[Rory Fowler]

My grandmother-in-law is moving to a nursing home very soon and my in-laws are planning on putting her house on the market. I have asked them to give me a few days to see if I can purchase it. In my research, I have learned Medicaid will penalize the family (in the form of withholding Medicaid) if the house is sold to a family member for less than "Fair Market Value".  My comps show a fair market value of $100K. But, as an investor, I want to purchase this house for $70K or less. If it is sold on the open market to a non family member, they family is willing to let it go at that price for a fast sale.

1. Can I purchase the house through my LLC to avoid the familial relationship problem with this transaction?

2. Aside from getting lucky with a very low appraisal, any ideas on how to justify a 30% discount to a government entity like Medicaid?

The frustrating part is I am being held to a higher price standard because of my relationship to the seller.