Social Security implications after selling house to son for mother-in-law suite conversion

If ur getting regular retirement benefits (not SSI) then having $100k won't affect ur SS at all. SSI has asset limits but retirement doesn't. The sale might be income for tax purposes but it doesn't reduce ur SS payments.

As someone who went through something similar with my mother last year, I can provide some clarification: 1. Regular Social Security retirement benefits (SSDI, Retirement, Survivors) are NOT affected by assets or living arrangements. You could have $1 million in the bank and live in a mansion - your regular SS benefits continue unchanged. 2. SSI (Supplemental Security Income) DOES have strict asset limits ($2,000 for individuals) and can be reduced if someone provides housing to you for free. 3. The $100,000 from your house sale is not counted as income for Social Security purposes, but you may have capital gains tax implications depending on how long you've owned the home and profit amount - though there are exemptions for primary residences. 4. Moving in with your son will not affect your regular Social Security retirement benefits at all. The only potential impact would be if you're receiving Medicare and the money pushes your annual income high enough to trigger IRMAA (Income-Related Monthly Adjustment Amount) which increases Medicare Part B/D premiums for higher-income beneficiaries. But that's a separate issue from your SS benefit amount.

For 2025, IRMAA kicks in when your Modified Adjusted Gross Income (MAGI) from your tax return 2 years prior exceeds $103,000 for individuals filing single. The home sale could potentially impact this. However, there's good news regarding capital gains on your home sale. If you've owned and lived in your home for at least 2 of the 5 years before selling, you qualify for an exclusion of up to $250,000 of capital gain (for single filers). This means that amount wouldn't count toward your income for tax or IRMAA purposes. Also important - if you experience a life-changing event (like selling your primary residence), you can file Form SSA-44 to request an adjustment to your IRMAA if your income will be significantly lower going forward than it was two years ago. I suggest consulting with a tax professional who understands Social Security and Medicare to get personalized advice for your specific situation.

DON'T DO IT!!!! I did something similar and SSA CUT OFF my benefits for 6 months while they "investigated"!!! They thought I was hiding assets!!! It was a NIGHTMARE trying to get them to understand I was just downsizing and moving in with family!!! Had to submit endless paperwork and PROVE everything with bank statements and house sale documents!!! They eventually restored my benefits with backpay but I almost lost my mind dealing with those people!!!

I just went through this exact situation with my elderly father last year. Trying to reach Social Security to get clear answers was impossible - 2+ hour wait times, disconnections, conflicting information from different representatives. I finally used a service called Claimyr (claimyr.com) that got us connected to an actual SSA agent in less than 10 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The SSA agent confirmed everything others have said here - regular retirement benefits are NOT affected by assets or living arrangements. The house sale proceeds won't impact your monthly benefit amount. We were able to get written confirmation which gave my dad peace of mind before proceeding with his move.

My neighbor went thru something similar last year and everything was fine with her SS checks. But she told me the tricky part was figuring out if the mother-in-law suite counted as a separate residence for property tax purposes. Might want to check with your local tax assessor about that part.

Wait i thought the $250,000 exclusion was only on profits not the whole sale price??? If the house was bought for $150k and sold for $350k then only $100k is profit and thats under the limit. But if it was bought for $50k and sold for $350k then thats $300k profit and would go over the exemption and some would be taxable. I think?????

just wondering... is your son going to charge you rent for the mother in law suite? because if he does that could complicate things with how the money is handled.

I'm in a similar situation planning ahead - my daughter wants to buy our family home next year when I turn 65. Reading through all these responses has been incredibly helpful! A few additional thoughts from my research: 1. Make sure to keep detailed records of the entire transaction - purchase agreement, closing documents, proof of mortgage payoff, etc. Even though regular SS retirement benefits aren't affected by assets, having everything documented gives peace of mind. 2. Consider timing if you're close to any income thresholds. Since IRMAA looks at tax returns from 2 years prior, the timing of when you realize any capital gains could matter for future Medicare premiums. 3. If your son is planning major renovations for the mother-in-law suite, you might want to clarify upfront how much of the sale proceeds (if any) you'll contribute to those improvements, as this could affect your tax situation. 4. One thing I learned from my research - if you do end up paying your son some monthly amount for utilities/maintenance, make sure it's documented properly. The IRS likes clear paper trails for family financial arrangements. Thanks to everyone who shared their experiences - this thread has been a goldmine of practical information!

As a newcomer to this community, I want to thank everyone for sharing such detailed and helpful information! I'm not in this exact situation yet, but my aging parents have been talking about potentially selling their home and moving in with one of us kids in the next few years. Reading through this thread has been incredibly educational - I had no idea about the distinction between regular Social Security retirement benefits and SSI, or about the IRMAA Medicare premium adjustments. The point about keeping detailed documentation and the capital gains exclusion for primary residences is especially valuable. One question that comes to mind after reading all these responses: For those who have gone through similar family arrangements, how did you handle the emotional/family dynamics aspect? Obviously the financial and legal considerations are crucial, but I imagine there might be some adjustment challenges when parents move in with adult children, even with separate living spaces. Any advice on making that transition smoother for everyone involved? Thanks again to @Paolo Esposito for asking such a relevant question, and to everyone who shared their experiences and expertise!