Cap gain on home sale and ACA eligibility (55, pension, moving)

[Cabound1]

Right now, I manage my AGI to stay eligible for health care subsidies. I’m too young for social security, no pension, and the only taxable income is generally via equity sales cap gains. Currently, I have medicaid in California, but have the option to manage the income level to qualify for exchange plans if I so choose.

I’m thinking of selling my home. I would have a large capital gain that would put me over the ACA eligibility.
So my question is this....how should I time this one time capital gain to minimize the time I am ineligible for subsidies? Given this is a one shot gain, how will it impact eligibility for the year it is realized, and also for the following years?

Anyone had experience with this?

Oops, maybe this should be in personal finance.....can the mods move pleas?

[Jkgourmet]

I assume you've owned this house more than one year and I assume this is your principle residence.

If so, Single persons can exclude up to $250,000 of the gain for federal tax purposes. Married couples get an exclusion for $500,000 gain.

If your gain is above those amounts, I'll be blunt: You've got no business being on medicaid or getting subsidies to help pay for your ACA premiums.

[mathjak107]

It is two years to get the exclusion not one year ...

Whether or not those with dough should get aca subsidies or medicaid is a philosophical question .

Personally I see nothing wrong with being allowed to keep more of what I earned by being able to qualify for an aca subsidy which is a rebate of some of my tax money .....

And that would be true regardless of assets ...as long as legally my income qualifies me I would go for it .

Poor planning made me not eligible or I would have loved to do it .

But philosophically I have a thing about going for Medicaid which is in design for poorer folks , , morally I think that is pushing it .

Just because we can do something does not mean we should.

But ,That’s my feelings.

The gain would put you out of the picture for the year as far as an aca

[TMSRetired]

Originally Posted by Cabound1

Right now, I manage my AGI to stay eligible for health care subsidies. I’m too young for social security, no pension, and the only taxable income is generally via equity sales cap gains. Currently, I have medicaid in California, but have the option to manage the income level to qualify for exchange plans if I so choose.

I’m thinking of selling my home. I would have a large capital gain that would put me over the ACA eligibility.
So my question is this....how should I time this one time capital gain to minimize the time I am ineligible for subsidies? Given this is a one shot gain, how will it impact eligibility for the year it is realized, and also for the following years?

Anyone had experience with this?

Oops, maybe this should be in personal finance.....can the mods move pleas?

I sold my home 2 years ago but was able to exclude all of the cap gains..it was my primary residence.

ACA is renewed annually so each year you put in your estimated income for next year. There is no impact next year for what happens in current year.
But at any time during the year you can modify your data for the current year...life change.

So, say you sell in June. You've been on ACA since Jan. Go up to ACA in June and do the life change stuff.
Your subsidy will change based on that. If you move you may also have to change provider.

I sold my home and moved from TX to SC.
My gains were excluded.
But I did have to redo my ACA..moving is a life change. I had to switch providers and my premium changed for the following month.

Here's the webpage:

https://www.healthcare.gov/reporting-changes/

I have been on ACA since its inception. And the reason is that my employer retiree plan premium went from $90/month to hundreds per month. I had a high deductible plan which got cancelled and then all retiree plans had to conform to the new rules....maternity, pediatric care and all this other stuff that retirees don't need. So I had no qualms moving over because....that's what the people wanted.
I retired at 55 and am still not eligible for medicare yet.

[TMSRetired]

Originally Posted by Jkgourmet

I assume you've owned this house more than one year and I assume this is your principle residence.

If so, Single persons can exclude up to $250,000 of the gain for federal tax purposes. Married couples get an exclusion for $500,000 gain.

If your gain is above those amounts, I'll be blunt: You've got no business being on medicaid or getting subsidies to help pay for your ACA premiums.

ACA was passed that the criteria for eligibility was income.
No one is cheating. I've paid plenty of taxes over the years, including getting hit with AMT.

[mathjak107]

Medicaid health insurance is where I morally and philosophically draw the line , not an aca subsidy for the wealthy.

Whether eligible or not I just have a thing about it

[Cabound1]

Originally Posted by TMSRetired

I sold my home 2 years ago but was able to exclude all of the cap gains..it was my primary residence.

ACA is renewed annually so each year you put in your estimated income for next year. There is no impact next year for what happens in current year.
But at any time during the year you can modify your data for the current year...life change.

So, say you sell in June. You've been on ACA since Jan. Go up to ACA in June and do the life change stuff.
Your subsidy will change based on that. If you move you may also have to change provider.

I sold my home and moved from TX to SC.
My gains were excluded.
But I did have to redo my ACA..moving is a life change. I had to switch providers and my premium changed for the following month.

Here's the webpage:

https://www.healthcare.gov/reporting-changes/

I have been on ACA since its inception. And the reason is that my employer retiree plan premium went from $90/month to hundreds per month. I had a high deductible plan which got cancelled and then all retiree plans had to conform to the new rules....maternity, pediatric care and all this other stuff that retirees don't need. So I had no qualms moving over because....that's what the people wanted.
I retired at 55 and am still not eligible for medicare yet.

Thanks for this. I will only get 250k in exclusions since I’m single, so there will still be a considerable amount that will go to the AGI line. This is CA real estate, remember.

It looks like selling late in the year, if I decide to, would mean I would immediately report it to Medicaid and become ineligible. I’m not sure what their re-eligibilty is, but it looks like when 2022 rolls around, I could immediately pick up an Exchange plan as my income for 2022 can be managed to qualify.

Would that be your understanding?

[TMSRetired]

Originally Posted by Cabound1

Thanks for this. I will only get 250k in exclusions since I’m single, so there will still be a considerable amount that will go to the AGI line. This is CA real estate, remember.

It looks like selling late in the year, if I decide to, would mean I would immediately report it to Medicaid and become ineligible. I’m not sure what their re-eligibilty is, but it looks like when 2022 rolls around, I could immediately pick up an Exchange plan as my income for 2022 can be managed to qualify.

Would that be your understanding?

Sorry..I'm on ACA only. I cannot help at all with medicaid.

[TMSRetired]

Originally Posted by mathjak107

Medicaid health insurance is where I morally and philosophically draw the line , not an aca subsidy for the wealthy.

Whether eligible or not I just have a thing about it

My taxable income is too high for medicaid. But if it weren't I'd sell some stocks to get the income up because I also draw the line there.

[mathjak107]

Aca subsidy was put in place for all who qualify...Medicaid is a whole other program for the poor and impoverished..I can not respect anyone’s decision who is wealthy to be that cheap , sorry but that is my philosophical view