Trying to do some planning around repositioning some of our rental portfolio and if I am correct, I may have tripped across a "Gotcha" coming from our planning to dispose of one(?) of our four properties.
Depending how the "income" from Depreciation Recapture is treated there actually could be two "Gotchas". One is the size of the tax bill, especially on one of our "older" (10 years) properties. The second one is the impact of the Depreciation Recapture income on reported income and negative impact on Medicare premium.
I was stunned to see how much the Part B premium bump up for the supposed "Higher Income" individuals. The first step is not too bad when you go over joint return of 170K (won't be hard to do when I have 117k of Depreciation Recapture). For 2017, extra premium over base is 53.50/mon/person plus another 13.30/mon for Plan D. If you break joint income of 214K, the Part B premium goes to 267.90/mon and Plan D extra is another 34.20/mon.
Can anyone advise me if there is any way short of a 1031 exchange to keep Depreciation Recapture out of MAGI that Medicare uses to set premiums?
The good news is that we have one move year before the RMD buzzsaw hits to absorb an income "bubble" from the depreciation recapture.
Thanks to all for any insight.
Nwsteve
Depending how the "income" from Depreciation Recapture is treated there actually could be two "Gotchas". One is the size of the tax bill, especially on one of our "older" (10 years) properties. The second one is the impact of the Depreciation Recapture income on reported income and negative impact on Medicare premium.
I was stunned to see how much the Part B premium bump up for the supposed "Higher Income" individuals. The first step is not too bad when you go over joint return of 170K (won't be hard to do when I have 117k of Depreciation Recapture). For 2017, extra premium over base is 53.50/mon/person plus another 13.30/mon for Plan D. If you break joint income of 214K, the Part B premium goes to 267.90/mon and Plan D extra is another 34.20/mon.
Can anyone advise me if there is any way short of a 1031 exchange to keep Depreciation Recapture out of MAGI that Medicare uses to set premiums?
The good news is that we have one move year before the RMD buzzsaw hits to absorb an income "bubble" from the depreciation recapture.
Thanks to all for any insight.
Nwsteve