Can You Lose Social Security Benefits If You Sell Your Home After Retirement?

4 min Read

June 25, 2023

Rear view of senior couple looking at house while standing in yard.

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The housing market is ever-evolving, and if you’re on Social Security and considering selling your home, it’s essential to understand the potential outcomes. Certain cities have left the housing market in 2023 at a standstill, while others are skyrocketing to the stratosphere.

Though selling a home in retirement doesn’t directly affect your Social Security check, it absolutely can affect your benefits.

For example, finance expert Christy Beiber wrote in the Motley Fool, “Specifically, if you are receiving SSI, you could lose eligibility for these benefits due to the sale of your home if you don’t do the process correctly.”

All things considered, it’s essential when seeking the best deal that you not only know the strategies for learning about the housing market in your area, but also how to avoid your Social Security benefits being affected.

Let’s explore considerations of selling your home while relying on Social Security benefits:

Financial Implications

Unlocking Home Equity: Selling your home can provide a significant cash boost in the form of home equity. This money can be utilized to pay off debts, explore more affordable housing options or bolster your retirement income.
Capital Gains Tax Considerations: Depending on the sale price and the duration of homeownership, you may be subject to capital gains tax. However, specific tax exemptions may apply if the property has been your primary residence for a certain period. Consult a tax professional to fully comprehend the tax implications for your situation.
Downsizing or Renting: Selling your home and downsizing to a smaller, more affordable property can potentially reduce your housing-related expenses. Alternatively, you may opt to rent a property, offering flexibility. However, be sure to consider the potential fluctuations in rental costs.

Are You Retirement Ready?

Housing Market Conditions

Understanding Market Value: Before deciding to sell, research recent home sales in your area to determine the current market value of your property. Engage the services of a real estate agent who can provide a comparative market analysis for an accurate estimate.
Evaluating Market Dynamics: Assess the supply and demand dynamics within your local housing market. Is it a seller’s market with high demand and limited inventory, or a buyer’s market with ample supply and weaker demand? Understanding the market conditions will help you set realistic expectations.

Social Security Considerations

Income and Benefit Impact: Selling your home does not directly affect your eligibility for Social Security benefits. However, any income generated from the sale may impact the taxation of your benefits or your eligibility for certain assistance programs. Familiarize yourself with the income limitations and reporting requirements associated with your specific benefits.
Asset Profile and Eligibility: Selling your home may alter your asset profile, potentially affecting your eligibility for means-tested benefits like Medicaid or Supplemental Security Income (SSI). “Should this happen, you would have to pay for these benefits through regular Medicare and would also lose your Extra Help supports,” Phillip Moeller, a retirement advisor and expert, told PBS. Consult with a financial advisor or benefits specialist to understand how selling your home may impact your eligibility for these programs.

When contemplating selling your home while on Social Security, it’s crucial to carefully evaluate the potential outcomes. Seeking guidance from professionals such as real estate agents, tax advisors and financial planners can help navigate this significant decision successfully.

Really take the time to understand the market before you sell. Pull from different experts, get family advice if you can, and do your own personal research. Too many retirees get caught selling their home too early just before a housing market boom. This is a big decision, and you deserve to be making the most money for yourself to have an easier, more comfortable retirement on Social Security.

Are You Retirement Ready?

The article above was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates’ editorial team.

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