From 24/7 Wall St. · Gerelyn Terzo · · 1m 20s
Dolly Parton Cottage Sells for $1.94m
Retirees selling homes face higher Medicare premiums years after moving out.
In brief
Retirees selling homes face higher Medicare premiums years after moving out. Retirees who sell homes can see Medicare premiums rise two years later due to taxable gains from the sale. Originally reported by 24/7 Wall St..
Dolly Parton Cottage Sells for $1.94m
Dolly Parton’s former cottage in Solvang, California sold for $1,945,150.
Five Offers for Cottage
The cottage drew five offers and interest from 10 serious buyers before closing.
Medicare Premiums Rise Two Years Later
Retirees selling homes can face higher Medicare premiums two years after moving out.
Taxable Gain Drives Medicare Bill
Medicare calculates premiums based on taxable capital gains from home sales.
Home-Sale Exclusion Limits Taxable Gain
Homeowners can exclude up to $250,000 of gain on a main home sale.
Widows Face Sharper Rules
Widows can still qualify for joint exclusion if the sale happens within two years of a spouse’s death.
Medicare Bill Arrives Two Years Later
Social Security uses tax returns from two years prior to set Medicare premiums.
Taxable Gain Example
A seller paid $300,000 decades ago, improved the home to $450,000, and cleared $800,000 after expenses.
Taxable Gain After Exclusion
After excluding $250,000, $100,000 of the $800,000 gain becomes taxable for Medicare.
The bottom line
Retirees who sell homes can see Medicare premiums rise two years later due to taxable gains from the sale.
