Can You Lose Social Security Benefits If You Sell Your Home After Retirement?
Written by
Andrew Lisa
Edited by
Rebekah Evans
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The Social Security Administration (SSA) can reduce retirement benefits if you claim early or earn too much income while collecting benefits before your full retirement age.
But once you retire, can the windfall from a home sale render you ineligible and lead to the loss of your monthly check? It’s a question all retirees should ask before they put their homes on the market.
You Will Not Lose Your Benefits by Selling Your Home
According to the SSA, eligibility for Social Security retirement or survivor benefits comes with no limits on income or assets and where you live has no impact on your check, either. Therefore, selling a home while retired can not render you ineligible for benefits, although it could expose a larger portion of your benefits to federal and/or state income taxes.
Also, proceeds from a home sale — or any capital gains — do not count toward the “earnings test,” which, according to SSA, allows them to temporarily reduce benefits for workers who claim Social Security before their full retirement age while earning income above a certain threshold.
SSDI Is Part of Social Security, so It’s Also Safe
Retirees aren’t the only people who collect Social Security. According to the SSA, 12.3% of beneficiaries collect Social Security Disability Insurance (SSDI) through the program — about 8.37 million people, roughly 6.43 million of whom are under 65.
They can lose their SSDI eligibility if they return to work, if their condition improves, if they reach full retirement age or become incarcerated — but what if SSDI recipients sell their homes?
In 2022, a disabled homeowner on Social Security asked if he could lose his benefits by selling his home in the “Ask Larry” forum on the Maximize My Social Security website.
The site’s president, Laurence Kotlikoff, professor of economics at Boston University and president of Economic Security Planning, Inc., responded, “As long as what you’re receiving is a Social Security benefit and not Supplemental Security Income (SSI), then the fact that you sold your house won’t have any effect on your benefits.
“There is no limit on the amount of cash and assets you can have and still be eligible for Social Security benefits, so if you’re receiving Social Security disability (SSDI) benefits, then you won’t lose those benefits due to selling your home,” he added.
Gains From a Home Sale Could Jeopardize SSI Benefits
According to the SSA, 4.88 million people collect Supplemental Security Income (SSI) and another 2.52 million collect both Social Security and SSI. For them, a home sale could have an impact.
Although the SSA manages both programs, SSI benefits are needs-based and not formulated according to your earnings history, like SSDI and Social Security retirement benefits. Instead, they’re reserved for the most indigent disabled people, children, adults and seniors, as is listed on SSA’s website.
According to Disability Attorneys of Michigan, selling a home could leave you with too much income to remain ineligible for SSI benefits (and Medicaid).
After selling, recipients have three months to buy a new home. If they have less than $2,000 after the new purchase, they’ll retain their benefits. If they keep the cash from the sale and don’t buy a new home within three months or if they do and end up with more than $2,000, they’ll forfeit their SSI eligibility for every month their cash exceeds that threshold.
From there, SSI recipients have 12 months to “spend down” their assets and apply to have their benefits reinstated.
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