Will selling my house affect my Social Security benefits next year?
I'm planning to sell my house next year (it's my primary residence) and move to a smaller condo to save money. I've been on Social Security retirement benefits for about 3 years now. Someone at my church group mentioned that selling your home can increase your income for the year and might reduce my SS benefits the following year. Is this true? I'm 67 and the house will probably sell for about $320,000. I bought it for $175,000 back in 2001. Will Social Security count this as income and reduce my monthly checks? I really can't afford to lose any of my benefit amount.
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Lucas Schmidt
Good news - selling your primary residence shouldn't affect your Social Security benefits at all. The capital gains from selling your primary home are excluded from the earnings test that could reduce benefits. For a single person, up to $250,000 in profit is tax-free (or $500,000 for married couples). Since you bought at $175k and are selling around $320k, you're well within that exclusion limit. The only income that affects Social Security benefits before Full Retirement Age is earned income from working (wages, self-employment). Capital gains from selling your house don't count for the SS earnings test.
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Eloise Kendrick
•Thank you so much! That's a huge relief. So just to be 100% sure, the profit I make ($145,000) won't be counted as income for Social Security purposes? Even if I have to report it on my taxes?
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Freya Collins
my sister sold her house last yr and SS didnt change at all!! dont worry about it
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Eloise Kendrick
•That's great to hear about your sister's experience! Hopefully mine will be the same. Did she have to report the sale to Social Security or anything like that?
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LongPeri
The previous responses are correct. Sale of your primary residence is not considered earned income for Social Security purposes. You only need to worry about the earnings limit if you're below your Full Retirement Age (FRA) and still working. At 67, you're already at or past your FRA, so even if you were working, the earnings limit wouldn't apply to you anyway. The capital gains from your house sale might affect the taxation of your Social Security benefits if it pushes your combined income high enough, but that's a separate issue from having your actual benefit amount reduced.
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Oscar O'Neil
•wait what do you mean about taxation of benefits??? I thought SS wasn't taxable??? i'm selling my house next month and now i'm worried
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LongPeri
To clarify about taxation: Up to 85% of your Social Security benefits can be subject to income tax depending on your "combined income" (adjusted gross income + nontaxable interest + half of SS benefits). For individuals: - If combined income is between $25,000-$34,000, up to 50% of benefits may be taxable - If combined income exceeds $34,000, up to 85% may be taxable For the house sale specifically, since you've owned and lived in it as your primary residence for at least 2 of the last 5 years, you qualify for the capital gains exclusion ($250,000 for individuals, $500,000 for married couples). Any profit above those thresholds would be subject to capital gains tax and could potentially affect the taxation of your benefits.
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Eloise Kendrick
•Oh I see - so my benefits won't be reduced, but I might have to pay more taxes on them for that year if the house sale pushes up my income. That's still much better than having my monthly check amount go down. Thanks for explaining!
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Sara Hellquiem
THE SSA DOESNT CARE ABOUT YOUR HOUSE SALE!!! But the IRS sure does!! They'll take every penny they can get their hands on. And then they'll tell SSA about your "higher income" and next thing you know you're paying taxes on benefits that YOU ALREADY PAID INTO YOUR WHOLE LIFE!!! The whole system is designed to take from retirees. My brother paid taxes on 85% of his SS last year because he sold a rental property. DOUBLE TAXATION!!
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Lucas Schmidt
•To clarify, the taxation of Social Security benefits is separate from benefit reduction. The original question was about whether selling a house would reduce their actual SS benefit amount (it won't). The tax situation is complicated, but in this case, with the capital gains exclusion for primary residences, most or all of the profit would be tax-free anyway.
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Charlee Coleman
I had to call Social Security last month about a similar situation (I sold family farmland) and was really worried about my benefits. I couldn't get through for days - busy signals, disconnects, or wait times over 2 hours. I finally used this service called Claimyr (claimyr.com) that got me connected to a real person at SSA in under 15 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent confirmed that capital gains from property sales don't affect your benefit amount. Saved me so much stress! Might be worth calling to get confirmation specific to your situation.
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Oscar O'Neil
•Omg thank u for sharing this! I've been trying to get thru to SSA for 3 weeks with no luck. gonna check this out!
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Freya Collins
Quick question: did you live in the house for at least 2 years? That matters for the tax exclusion thing they were talking about
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Eloise Kendrick
•Yes, I've lived here for over 20 years! So it sounds like I'll qualify for that exclusion. Thanks for checking!
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Liv Park
My husband and I went through exact same situation in June. Sold our home of 30yrs and downsized to condo. Made about $200k profit and NOTHING happened to our SS checks. They stayed exactly the same amount. Dont worry about it at all!!!!
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Oscar O'Neil
I'm so confused about all this tax stuff everyone's talking about. I thought this was just about whether SS payments would go down? Now I'm worried about taxes too. Does anyone know if you have to TELL Social Security when you sell your house?
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Lucas Schmidt
•You don't need to notify Social Security when you sell your house. The only time you need to report income to SSA is if you're under Full Retirement Age and have earned income from work that might exceed the earnings limit. A house sale isn't earned income, so no need to report it to SSA. You'll just handle it on your tax return.
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Eloise Kendrick
Thank you all for the helpful responses! I feel much better knowing that selling my house won't reduce my monthly SS benefit amount. I understand I might have some tax considerations, but since I'm well under the $250,000 capital gains exclusion, even that shouldn't be a big issue. I really appreciate everyone sharing their knowledge and experiences!
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