Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Tax Question: Downsizing vs. ACA Subsidies
Old 02-20-2014, 12:26 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Tax Question: Downsizing vs. ACA Subsidies

If we sell our current house, I know for a married couple we would get up to a $500K exclusion from capital gains taxes.

But how will this impact ACA subsidies? Do we lose those in the year we sell the house? We would be over the 400% O-MAGI in the year we sell the house, if the excluded capital gains from the house are included in the O-MAGI amount.

From what I have read we would also not get the 3.8% Medicare tax on excluded capital gains amount of $500K or less. Is that correct?
__________________

__________________
daylatedollarshort is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-20-2014, 01:17 PM   #2
Full time employment: Posting here.
Accidental Retiree's Avatar
 
Join Date: Feb 2012
Posts: 975
That is an interesting question. It never occurred to me that excluded capital gains from house sale would be part of O-MAGI.

But if they are included, then wouldn't turning around and paying cash for another, albeit less expensive, house exclude some of that not-excluded-after-all CG?
__________________

__________________
Chief Retirement Strategist
The AR Group
Accidental Retiree is offline   Reply With Quote
Old 02-20-2014, 01:43 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Quote:
Originally Posted by Accidental Retiree View Post
That is an interesting question. It never occurred to me that excluded capital gains from house sale would be part of O-MAGI.

But if they are included, then wouldn't turning around and paying cash for another, albeit less expensive, house exclude some of that not-excluded-after-all CG?
I think buying a new house will work for the asset part of the college financial aid test, but I don't think it would change our MAGI for FAFSA for college aid and the ACA income test.
__________________
daylatedollarshort is offline   Reply With Quote
Old 02-20-2014, 01:48 PM   #4
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,418
If you qualify for the exclusion you never report the capital gain, so it never becomes part of AGI. It is not an "add back" item, so no, home sale proceeds eligible for the exclusion should not affect the calculation for ACA premium assistance.
__________________
MichaelB is offline   Reply With Quote
Old 02-20-2014, 01:53 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,326
Quote:
Originally Posted by MichaelB View Post
If you qualify for the exclusion you never report the capital gain, so it never becomes part of AGI. It is not an "add back" item, so no, home sale proceeds eligible for the exclusion should not affect the calculation for ACA premium assistance.
Okay, thanks. That is what I wasn't sure about.
__________________
daylatedollarshort is offline   Reply With Quote
Old 02-20-2014, 03:28 PM   #6
Full time employment: Posting here.
Accidental Retiree's Avatar
 
Join Date: Feb 2012
Posts: 975
Quote:
Originally Posted by MichaelB View Post
If you qualify for the exclusion you never report the capital gain, so it never becomes part of AGI. It is not an "add back" item, so no, home sale proceeds eligible for the exclusion should not affect the calculation for ACA premium assistance.
Thanks for the confirmation.
__________________
Chief Retirement Strategist
The AR Group
Accidental Retiree is offline   Reply With Quote
Old 02-20-2014, 06:51 PM   #7
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 752
Will a ROTH account ever be "means tested" for the ACA? Since I paid future taxes to shield several million I hope not.
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Old 02-20-2014, 07:01 PM   #8
Full time employment: Posting here.
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 752
It's a great thing that ACA is allowing more people to ER and get benefits paid for by the younger, healthier job workers. We did our part, now they can do theirs.
__________________

__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
ACA tax credit -negative tax liability in 2014 question shotgunner FIRE and Money 9 12-14-2013 05:55 PM
Website for ACA Options, Premiums, and Subsidies jflynn4 Health and Early Retirement 7 11-11-2013 03:52 PM
Federal Exchange - ACA subsidies in jeopardy shotgunner Health and Early Retirement 13 10-25-2013 10:30 PM
Poll: Who's going to try to get ACA subsidies by staying under the threshold? explanade FIRE and Money 200 04-24-2013 07:46 PM
Healthcare ACA subsidies appear to depend on multi-year income pixelville FIRE and Money 21 03-14-2013 10:01 PM

 

 
All times are GMT -6. The time now is 12:14 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.