Second home sale capital gain and ACA

[fisherman]

We are seriously looking at selling our Lake house next spring and factoring that into our ACA plan choice. Since it is a second home it looks like we would owe 15% Capital Gains on the profit since we have owned it for several years. The profit on the sale will raise our MAGI well above any subsidy level. If I am understanding this correctly we will owe 15% tax on the income plus lose our subsidy for they year. Since we are able to control our taxable income we usually get a big subsidy.

Given the above I am looking at the lowest cost insurance option and hoping for no big medical issues next year. I would appreciate in tax guidance or ideas the group can share for this situation.

 

[pb4uski]

Your conclusion that you would owe capital gains tax and you would not be eligible for a subsidy seems sound.

 

[MichaelB]

Given the above I am looking at the lowest cost insurance option and hoping for no big medical issues next year. I would appreciate in tax guidance or ideas the group can share for this situation.

That additional cap gain also means a smaller medical expense deduction. An HSA eligible policy will at least give you an above the line exemption from income of $3350 individual / $6350 family, plus an additional $1K per person over age 55.

 

[fisherman]

For others that might fall into this situation it looks like an installment sale would be the way to go. It's paid for so certainly possible if we can work with the buyer.

 

[retiredinnyc]

My extremely elderly mom sold her home in 2011, she got slapped with a bigger social security monthly deduction, it went on for a year it was part of the obamacare surcharge. She had to suk it up for 12 months and then it went away.

 

[MichaelB]

My extremely elderly mom sold her home in 2011, she got slapped with a bigger social security monthly deduction, it went on for a year it was part of the obamacare surcharge. She had to suk it up for 12 months and then it went away.

There was no "obamacare surcharge" in 2011 or 2012. Medicare B premiums were already subject to income levels, and the ACA froze the income levels through 2019, effectively removing inflation adjustment.

 

[pb4uski]

Michael, please don't confuse the situation by introducing facts. Don't you know it has to be Obamacare's fault?

 

[retiredinnyc]

This is what I was told

When I called social security on her behalf I was told due to ACA she had to pay a part D fee and as a high income earner she had to pay more for her part B, the poster was asking if selling a home with profits would count , in my experience it would,and btw even the President has called it Obamamacare

 

[sengsational]

For others that might fall into this situation it looks like an installment sale would be the way to go. It's paid for so certainly possible if we can work with the buyer.

Or if the real estate outlook looks good and the monthly numbers work-out (cash flow neutral or positive), you could just turn it over to a rental management company. Sell once you hit 65 without ACA impact at least.

 

[MichaelB]

When I called social security on her behalf I was told due to ACA she had to pay a part D fee and as a high income earner she had to pay more for her part B, the poster was asking if selling a home with profits would count , in my experience it would,and btw even the President has called it Obamamacare

The only change to Medicare D from the ACA was to reduce the famous "donut hole" or cost sharing. ACA did not increase Medicare D premiums, which were in place long before the ACA was passed.

 

[retiredinnyc]

She never paid 1 cent to part d , after the sale she paid for 12 months

 

[retiredinnyc]

After 12 moths it went back down to 104.90 for b and zero for d

 

[retiredinnyc]

And since you seem to have an obsession with my posts, I was answering the fellow who was thinking of selling a property if capital gains would count as income towards ACA, I'm my experience it affected social security that's what I was sharing

 

[MichaelB]

And since you seem to have an obsession with my posts, I was answering the fellow who was thinking of selling a property if capital gains would count as income towards ACA, I'm my experience it affected social security that's what I was sharing

Please, no obsession, certainly nothing personal. Let's keep it respectful and friendly.

 

[REWahoo]

retired, that "NY state of mind" won't get you very far here arguing with a moderator on the forum.

It appears to me you are confused/got bad info on your call to SS as to why your mom had those higher deductions on her SS check. The ACA/Obamacare reasoning doesn't hold water.

 

[pb4uski]

+1 I'm certain that SS customer service reps never give callers a wrong answer, so who knows what really happened.

 

[retiredinnyc]

Bad info or not she got banged for more money on a part b and a part d after the sale

 

[retiredinnyc]

If told you what happened

+1 I'm certain that SS customer service reps never give callers a wrong answer, so who knows what really happened.

.i told you what happened