Will house sale profits from downsizing affect my Social Security or trigger IRMAA for Medicare?

theres a thing called IRMAA (income related monthly adjustment amount) for Medicare. its when they charge u more for Medicare part B if ur income is higher. the $$$ from selling ur house mite count depending on how much profit u made from when u bought it

The proceeds from selling your home generally won't affect your Social Security retirement benefits. Once you're at full retirement age (FRA), there's no earnings limit that would reduce your benefits. However, IRMAA (Income-Related Monthly Adjustment Amount) for Medicare is definitely something to consider. This is an additional premium amount added to your Medicare Part B and Part D if your income exceeds certain thresholds. For IRMAA purposes, the IRS looks at your modified adjusted gross income (MAGI) from 2 years prior. The capital gains from selling your home could potentially increase your MAGI for that tax year. The good news is that if your home was your primary residence and you've lived there for at least 2 of the last 5 years, you can exclude up to $250,000 ($500,000 for married couples) of the gain from your income. If your gain falls within these exclusion limits, it wouldn't affect your IRMAA. I'd recommend talking with a tax professional before selling to understand how your specific situation might be affected.

The government is ALWAYS looking for ways to take more of our money!!! Social Security doesn't care about your house sale because it only counts EARNED income when you're under full retirement age. But Medicare with their IRMAA surcharges will ABSOLUTELY hit you with higher premiums if your income goes up too much in one year!!!! This is how they punish seniors for being responsible with money. My premiums went up $176 PER MONTH just because I had to take a large IRA distribution one year for home repairs!!!! It's HIGHWAY ROBBERY!!!!!

The IRMAA thresholds for 2025 aren't officially announced yet, but based on the 2024 figures, the first tier starts when your MAGI exceeds $103,000 (single) or $206,000 (married). At that point, your monthly Part B premium increases by about $69 per person. The key factor here isn't the house sale proceeds itself, but your capital gains. So if you bought at $98,000 and sell for $315,000 (rough calculation from your numbers), your gain would be $217,000. But with the $250,000 exclusion, none of that would count as taxable income assuming this is your primary residence. However, if you've been deprecating part of the home for a home office, or if it wasn't your primary residence for 2 of the last 5 years, different rules apply. Also, if you've claimed the capital gains exclusion on another home sale within the past two years, you might not be eligible to use it again. I'd suggest using the SSA's IRMAA calculator or consulting with a tax professional who specializes in retirement planning.

my mom just went thru this last year her house sold for a lot more than she paid back in the 70s but her medicare didnt go up because of that 250,000 exclusion thing... but the money sitting in her account did mess up her eligibility for the medicare savings program that was helping with her premiums so watch out for that too!!

A couple of important distinctions: 1. For Social Security retirement benefits, once you're at full retirement age (which you are at 67), there is NO earnings limit. Your benefits won't be reduced regardless of how much you earn or have in assets. 2. For Medicare and IRMAA: If your capital gains fall under the $250,000 exclusion (which it sounds like they will), the actual proceeds from the sale won't impact your IRMAA. But be careful - if you invest that $215,000 and it generates significant taxable interest, dividends, or capital gains in future years, THAT income could trigger IRMAA. 3. Be aware that having $215,000 in assets won't affect regular Medicare, but it would affect eligibility for Medicaid or Medicare Savings Programs which are means-tested. I recommend tracking your MAGI carefully in the year you sell. If something unexpected happens and you do cross an IRMAA threshold, remember you can file Form SSA-44 (Life-Changing Event) if your income will be lower in subsequent years.

when i tried calling social security to ask about IRMAA i was on hold for 3 HOURS and then got disconnected!!! so frustrating!!! i ended up using claimyr.com which got me through to a real person in about 20 minutes. they have this video that shows how it works https://youtu.be/Z-BRbJw3puU - was totally worth it to actually get my questions answered about how my retirement income would affect my medicare costs

One more thing to consider - IRMAA is calculated based on your tax return from 2 years prior. So if you sell your house in 2025, any potential IRMAA impact would affect your Medicare premiums in 2027. This gives you some planning time. If you anticipate other large income events in the next few years (like RMDs or other investment sales), you might want to strategize the timing of everything to avoid having multiple high-income years that could trigger IRMAA.

To summarize what everyone has correctly pointed out: 1. Social Security benefits: Your house sale won't affect these at all since you're over FRA. 2. Medicare IRMAA: If your gain is under the $250,000 exemption (which it likely is based on your purchase price), there would be no impact on your IRMAA status. 3. Watch out for: How you invest the proceeds could generate taxable income in future years. 4. Timeline: IRMAA looks at income from 2 years prior, so any potential impact would be delayed. 5. Appeals: If you do get hit with IRMAA due to a one-time event, you can appeal using Form SSA-44. For peace of mind, I'd recommend consulting with a financial advisor who specializes in retirement planning before making any major decisions. They can help you structure things to minimize any negative impacts.

Just wanted to add one more consideration - if you're planning to put that $215,000 in regular savings accounts, you might want to think about how the interest income could affect your taxes going forward. Even at today's savings rates (around 4-5%), that could generate $8,000-$10,000+ in taxable interest annually, which adds to your MAGI for future IRMAA calculations. You might want to consider tax-advantaged options like municipal bonds (if you're in a higher tax bracket) or spreading the money across different types of investments to manage the tax impact. Also, if you're not already maxing out any available tax-deferred accounts, that could be another strategy to keep your MAGI lower in future years. Definitely something to discuss with both your tax preparer and a financial advisor to make sure you're optimizing for both current and future tax situations!

Great point about the interest income! I hadn't thought about that part. With $215,000 earning interest, that could definitely add up over time. I'm already contributing to my IRA but maybe I should look into some of those municipal bonds you mentioned. Do you know if there are any other tax-free investment options that might work well for someone in my situation? I don't want to be too risky with this money since it's basically my nest egg from downsizing.

As a newcomer to this community, I wanted to add something that hasn't been mentioned yet - you might want to consider the timing of your home sale in relation to your state's tax situation too. Some states don't tax capital gains at all, while others do. If you're planning to move to a different state after downsizing, the timing of when you establish residency could make a difference in your overall tax burden. Also, I noticed someone mentioned the Medicare Savings Program earlier. Even though your house sale proceeds likely won't trigger IRMAA (thanks to that $250k exclusion), having $215k in liquid assets could affect eligibility for other Medicare assistance programs that have asset limits. It's worth checking if you currently qualify for any of these programs before making the sale. One last thought - if you're downsizing from a larger home to a condo, don't forget about the potential ongoing cost differences (HOA fees, property taxes, etc.) when planning your budget. Sometimes the monthly savings from downsizing can help offset any potential Medicare premium increases down the road!

As someone new to this community, I wanted to share something that might be helpful - if you do end up with any unexpected IRMAA charges in the future, there's actually a lesser-known provision where you can request a "new initial determination" if your income drops significantly in subsequent years. I went through this with my aunt who had a similar situation. She sold her home, got hit with IRMAA two years later, but then was able to get it reduced when she showed that her income had returned to normal levels. The key is documenting that the house sale was truly a one-time event and that your ongoing income is much lower. Also, since you mentioned putting the money in savings - consider that some high-yield savings accounts are now offering promotional rates that might be higher than CDs, but without the commitment. Just something to explore while you're deciding on your long-term investment strategy. The flexibility might be worth it given that you're navigating a major life transition with the downsizing. Best of luck with your sale! It sounds like you're being really smart about planning ahead for all the potential implications.

As a newcomer to this community, I wanted to add one more important consideration that I learned the hard way - make sure to keep detailed records of all your home improvement expenses over the years! Things like major renovations, additions, new roof, HVAC systems, etc. can be added to your original purchase price (called "adjusted basis") which could further reduce your taxable capital gains. So if you bought for $98k in 1989 but spent $50k on improvements over the years, your basis would be $148k, not $98k. This could make an even bigger difference in staying under that $250k exclusion threshold. Also, I noticed several people mentioned the 2-year lookback for IRMAA. One strategy some financial advisors recommend is called "income smoothing" - if you know you'll have a high-income year from the house sale, you might consider deferring other income sources (like Roth conversions or large withdrawals) to the following year to avoid stacking everything into one tax year. The fact that you're thinking about this ahead of time puts you way ahead of most people! Most folks don't realize the IRMAA implications until they get that surprise Medicare premium notice two years later.

As a newcomer to this community, I wanted to share something that might help with your planning timeline. Since you're selling in spring 2025, you'll be filing that tax return in early 2026, and any potential IRMAA impact wouldn't hit until 2027. This gives you almost two full years to plan! One thing I learned from my own experience is to keep a "tax impact folder" starting now - include your original purchase documents, all improvement receipts (as others mentioned), and any depreciation records if applicable. When tax time comes, you'll have everything organized. Also, since you're 67 and already collecting Social Security, you might want to consider whether this is a good time to do any Roth IRA conversions with some of the proceeds. If your capital gains end up being minimal (thanks to that $250k exclusion), you might be in a relatively low tax bracket this year, making it an opportune time for conversions before RMDs kick in at 73. The fact that you're asking these questions now shows great planning! Most people don't think about the Medicare implications until they get that surprise bill two years later.

As a newcomer to this community, I wanted to add something that might be helpful for your situation. Since you're planning to downsize and will have that $215,000 in proceeds, you might want to consider the "once every two years" rule for the capital gains exclusion. If you've used the $250,000 exclusion on another home sale within the past two years, you wouldn't be eligible to use it again. But based on your timeline and the fact that this sounds like your long-term family home, you should be fine. Also, something I learned recently - if you end up needing to access those sale proceeds for any major expenses (like healthcare costs) in future years, having that money in easily accessible accounts versus tied up in investments could make a difference for your financial flexibility. Just another angle to consider as you plan your investment strategy with the proceeds. It sounds like you're being really thoughtful about all the implications, which is smart! This community has such great collective knowledge about navigating these Medicare and Social Security complexities.

As a newcomer to this community, I wanted to share something that might be relevant to your downsizing plans. Since you're moving from a house to a condo, don't forget to factor in the potential property tax differences when calculating your overall financial picture. Condos often have lower property taxes than single-family homes, but you'll have HOA fees to consider. The good news is that some HOA fees might be partially tax-deductible if they cover things like exterior maintenance that you would have paid for separately as a homeowner. Also, I noticed everyone has focused on the federal tax implications, but depending on your state, there might be additional considerations. Some states have their own capital gains taxes or different rules for retirement income that could affect your overall tax situation. One more thought - since you're putting $215,000 into savings, you might want to consider spreading it across multiple banks to stay within FDIC insurance limits ($250,000 per bank). With interest rates still relatively high, you could potentially earn $8,000-12,000 annually in interest, which as others mentioned, would count toward your MAGI for future IRMAA calculations. It sounds like you're being very thoughtful about this major transition - best of luck with your downsizing plans!

As a newcomer to this community, I wanted to add one more consideration that I don't think anyone has mentioned yet - the potential impact on your homestead exemption if you're currently receiving one. In many states, homestead exemptions provide property tax relief for primary residences, and when you sell and move to a condo, you'll want to make sure to apply for the homestead exemption on your new property right away to avoid any gaps in coverage. Also, since you're downsizing and will have significant cash proceeds, you might want to consider the psychological aspect of managing that much money at once. I've seen friends get overwhelmed by having to make investment decisions with large lump sums. You might consider working with a fee-only financial advisor (not someone who earns commissions) to help you develop a strategy for gradually investing the proceeds rather than feeling pressured to put it all to work immediately. One last thought - keep in mind that Medicare premiums are deducted directly from your Social Security payments, so if you do get hit with IRMAA in the future, you'll see it as a reduction in your monthly Social Security deposit rather than a separate bill. This can be surprising if you're not expecting it! It sounds like you're well-prepared though, and this community has given you excellent guidance.

As a newcomer to this community, I wanted to share something that might be helpful for your planning - have you considered the potential impact on any state-specific senior property tax exemptions or freezes you might currently have? Some states offer additional property tax relief programs for seniors that are tied to income limits, and the proceeds from your home sale (even if federally tax-free under the $250k exclusion) might affect eligibility for these local programs. Also, since you mentioned you'll be putting the money in savings initially, you might want to look into Treasury I Bonds as part of your strategy. You can purchase up to $10,000 per year per person, and they're currently offering decent rates while being completely tax-free at the state level. The interest is also deferred for federal taxes until you cash them out, which gives you more control over when that income hits your tax return for IRMAA purposes. One more thought - if you have any adult children, this might be a good time to consider gifting strategies. The annual gift tax exclusion allows you to give up to $17,000 per recipient (in 2023) without any tax implications. This could help you reduce your overall asset base if you're concerned about future means-tested benefit eligibility while also helping family members. It's clear you're thinking ahead, which is so smart! This community has been incredibly helpful with the Medicare and federal tax aspects - I hope these additional state and planning considerations are useful too.

As a newcomer to this community, I wanted to add one more perspective that might be helpful for your downsizing plans. Since you're 67 and already collecting Social Security, you might want to consider how the timing of your home sale could affect your overall retirement tax planning strategy. One thing I've learned from reading through all these excellent responses is that 2025 might actually be a great year for your sale from a tax planning standpoint. If your capital gains are covered by the $250,000 exclusion (which sounds likely based on your numbers), you could potentially use this as a "low tax year" opportunity to do things like Roth IRA conversions with some of the proceeds, or even consider harvesting any investment losses in other accounts to offset future gains. Also, since several people mentioned the interest income from your $215,000 potentially affecting future IRMAA calculations, you might want to consider a "bucket" approach - keeping some in high-yield savings for immediate access and peace of mind, some in CDs or Treasury securities for predictable income, and perhaps some in tax-advantaged investments for long-term growth. The fact that you're planning this far ahead really impressed me! Most people don't realize how many moving pieces there are with Medicare, taxes, and retirement planning until they're already in the middle of it. This community has provided such comprehensive guidance - it's exactly why these forums are so valuable for navigating major life transitions.

As a newcomer to this community, I wanted to add something that might be helpful based on what I've learned from my own recent downsizing experience. One thing that caught my attention in your post is that you mentioned putting the $215,000 "in savings" - you might want to consider the current banking landscape when making that decision. With interest rates where they are now, you could potentially earn 4-5% on that money in high-yield savings accounts or CDs, which as others have mentioned, would generate significant taxable interest income ($8,000-$10,000+ annually). But here's something I wish I had known earlier - some credit unions and smaller banks are offering promotional rates that are even higher than the big national banks, sometimes 5-6% for new customers. Also, since you're dealing with such a large amount, you might want to consider "CD laddering" - breaking the money into chunks and investing in CDs with different maturity dates (6 months, 1 year, 18 months, etc.). This gives you both higher rates than regular savings and the flexibility to access portions of your money at regular intervals without penalties. One more thought - given all the excellent advice here about IRMAA and tax planning, you might want to keep a separate "tax planning fund" of maybe $20,000-$30,000 in a more accessible account. That way, if you need to make strategic moves (like charitable donations to reduce your MAGI or paying for tax advice), you have liquid funds available without disrupting your main investment strategy. This community has provided such thorough guidance - I'm impressed by how knowledgeable everyone is about these complex retirement planning issues!