sell at 63, pay more at 65
Medicare sets your first premium using your income from the year you turn 63.
That matters if you own a home you might sell in your early sixties.
Medicare prices Part B and Part D off a tax return from two years back, and coverage starts at 65.
The profit on a house sale counts toward the income Medicare looks at.
You can exclude $250,000 of that gain if you're single, $500,000 if you're married.
The house has to have been your main home for two of the last five years.
Those limits were written in 1997 and have never been adjusted for inflation.
Home prices have roughly tripled since then.
The math: say you bought in the mid-nineties for $175,000 and sell today for $800,000.
After the $250,000 exclusion, $375,000 of that sale counts as income.
For a single seller, that adds about $6,400 to the Medicare premiums two years later.
Sell in the year you turn 62 instead, and the gain lands on a year Medicare never charges you for.
I own a couple dozen rentals, so I've run into this on the sale side: the year a gain lands in changes what the sale costs.
The whole calendar year counts, so a June closing and a January Roth conversion land on the same return.
Keep the conversion or the extra IRA withdrawal in a different year than the sale.
The higher premium lasts one year, then goes back to the standard amount.
None of this is a reason to keep a house you don't want.
Close the sale before the year you turn 63, or plan for one year of higher premiums.
As promised, income over wealth in under a minute.
- Dan
That matters if you own a home you might sell in your early sixties.
Medicare prices Part B and Part D off a tax return from two years back, and coverage starts at 65.
The profit on a house sale counts toward the income Medicare looks at.
You can exclude $250,000 of that gain if you're single, $500,000 if you're married.
The house has to have been your main home for two of the last five years.
Those limits were written in 1997 and have never been adjusted for inflation.
Home prices have roughly tripled since then.
The math: say you bought in the mid-nineties for $175,000 and sell today for $800,000.
After the $250,000 exclusion, $375,000 of that sale counts as income.
For a single seller, that adds about $6,400 to the Medicare premiums two years later.
Sell in the year you turn 62 instead, and the gain lands on a year Medicare never charges you for.
I own a couple dozen rentals, so I've run into this on the sale side: the year a gain lands in changes what the sale costs.
The whole calendar year counts, so a June closing and a January Roth conversion land on the same return.
Keep the conversion or the extra IRA withdrawal in a different year than the sale.
The higher premium lasts one year, then goes back to the standard amount.
None of this is a reason to keep a house you don't want.
Close the sale before the year you turn 63, or plan for one year of higher premiums.
As promised, income over wealth in under a minute.
- Dan
