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Does The Sale Of Rental Property Affect Social Security Benefits

Choose An Experienced Disability Attorney

Can You Own Rental Property While on Social Security Disability

Having a passive income can make applying for social security disability payments more challenging, and to ensure you get the best outcome for your case you should start by calling Terry Katz & Associates an NYC Social Security Disability Law office who knows the ins and outs of the disability benefits process and can guide you step-by-step. Please call or contact us for a free consultation with an experienced NY SSD attorney at our Long Island law office.


I just wanted to let you know how happy I was with the job that Maggie Langdale did in getting me approved for SSDI and maybe more importantly, not having to have a review for another 5-7 years! Now I can concentrate more on my health, especially with the added benefit of Medicare next December.

Maggie went out of her way explaining every step of the process and answering all my questions on the phone or immediately after I emailed her. We reviewed all my answers to the lengthy paperwork and made several important changes. I would definitely advise anyone to use Maggie and your law firm!

What Benefits Can I Get With Ssdi

A Social Security Disability lawyer can help many of these obtain information on how to qualify for such benefits, which include the programs noted below.

  • Supplemental Security Income.
  • Supplemental Nutrition Assistance Program
  • Other Benefits.

How much can you make on disability in 2020?

While a disabled person applying for or receiving SSDI cannot earn more than $1,310 per month by working, a person collecting SSDI can have any amount of income from investments, interest, or a spouses income, and any amount of assets.

Does Capital Gains Affect Social Security Payments

How do you count stock profits from an IPO as Social Security earnings? Capital gains are not counted toward your earnings limit because they do not come from something other than work, such as pensions, annuities, investment income, interest, IRAs, and 401 plans.

In the United States, capital gains and social security benefit taxes are linked. In the case of low income from other sources, you may not be required to pay taxes on your Social Security benefits. In contrast, if you make a large capital gain, your benefits will be taxed. Long-term capital gains can be taxed at different rates depending on your tax bracket. In the case of Social Security benefits, you may be liable for taxable income. In addition to calculating base income, the IRS establishes a certain number for married and single couples. If you earn more than $34,000 a year, you may have to pay taxes on up to 85 percent of your benefits. It is critical that you include your capital gains tax return as well as your other income on your tax return.

Read Also: At What Age Do Medicare Benefits Start

Ask The Advisor: May 2015

Would Selling A Home Affect Our Social Security?

Q: My wife is 65 and Im 66. Both of us have started Social Security. We have an opportunity to sell our home, and would realize about $180,000 gain. Would this affect what we receive in Social Security? How about taxes?

A: The good news is that the sale of your home, or real estate that you hold as an investment , wont reduce your Social Security benefits. Social Security earnings restrictions rules only kick in when income is received as wages and earnings from jobs.

But while your Social Security benefits wont be reduced by capital gains, your benefits will be subject to taxation. Your gain is also likely to mean you and your wife will pay higher Medicare Part B and Part D premiums in 2016, and that can take a sizable bite out of your budget.

If you are selling a home thats your primary residence, individuals are allowed to exclude up to $250,000 in capital gain and married couples $500,000 if filing jointly. To qualify, you must live in your principal residence for at least two out of the five years before you sell it. But this tax break doesnt apply to a vacation home or other property. In that case the more usual capital gains rules would apply.

The income shown on the return you file for 2014 this tax season will be used to determine what you pay for your Part B and Part D coverage in 2016. Beneficiaries with higher incomes pay higher premiums for Part B and a surcharge for Part D coverage.

If Your Social Security Disability Benefit Is Denied Can You Appeal

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You can appeal a decision if you are denied disability payments in the state of New York, though the process can be lengthy. If you proceed with an appeals process it is highly recommended that you hire an experienced social security disability lawyer to ensure that you follow proper procedure and your appeal has the best chance for being considered. When you appeal a decision there are a few channels you will have to go through.

  • You will need to file for a reconsideration which will have a different SSA examiner review the case to see if the decision should be changed.
  • New evidence will then be heard at an Administrative Law Judge Hearing to see if the new evidence warrants a different decision.
  • If incorrect procedures were behind your denial than you may be able to have your case heard by the Appeals Council. If procedural problems were determined in will then go back to the ALJ to be retried.
  • If all other appeal attempts to the SSA fail, you can appeal your case to the federal court of New York.
  • Since the appeals process can mean being without benefits for a significant amount of time, it is prudent to hire an SSDI attorney before beginning the application process.

    Also Check: To Qualify For Workers Compensation Benefits The Employee Must Be

    The Medicare Tax Is Imposed On Only A Portion Of Investment Income

    The Medicare tax is a 3.8% tax, but it is imposed only on a portion of a taxpayer’s income. The tax is paid on the lesser of the taxpayer’s net investment income, or the amount the taxpayer’s AGI exceeds the applicable AGI threshold .

    Example: Phil and Penny are a married couple who file a joint return. Together they earn $200,000 in wages. They also earn $200,000 in net rental income and $150,000 in other investment income. Their AGI is $550,000, including $350,000 in net investment income. They must pay the 3.8% Medicare tax on the lesser of their $350,000 of net investment income, or the amount their AGI exceeds the $250,000 threshold for married taxpayers$300,000. Since $300,000 is less than $350,000, they’ll have to pay the 3.8% tax on $300,000. Their Medicare contribution tax for the year will be $11,400 .

    At most, you’ll have to pay the tax on the portion of your AGI that exceeds the $200,000 or $250,000 thresholds.

    What Are Social Security Disability Benefits

    If you are a disabled individual and unable to hold gainful employment, you may be entitled to SSDI monthly payments based on the amount of money that you have contributed to the Social Security system during the time you were employed. To qualify for disability benefits, the Social Security Administration must determine that you are both completely disabled and entitled to receive disability benefits through social security.

    Once you have received your determination, you will also be subject to certain limitations about the amount of money that you can earn. If your earnings exceed these limits, then the Social Security Administration may determine that you are no longer disabled, and cease your benefits due to your work activity.

    For some people, their main income may come from what is known as passive earnings which do not count as a work activity.

    Don’t Miss: Attorneys For Social Security Benefits

    When Can’t You Take Advantage Of Capital Gains Exclusions

    It wouldn’t be the U.S. tax code if there weren’t limits to the real estate exclusion. If any of the following apply, you will have to pay tax on the whole gain, meaning it will count toward your MAGI:

    • The home you sold was not your primary residence
    • In the 5-year period before selling the home, you owned it for less than 2 years
    • You did not live in the home for at least 2 years during the 5-year period before selling
    • You claimed the exclusion for another home sale during the 2-year period before selling this home
    • You bought the home in the last 5 years with a 1031 exchange changing one investment property for another
    • You owe the expatriate tax

    To be sure, you should always talk to a tax accountant.

    Will I Lose Social Security Benefits If I Sell My House

    Do You Have To Pay Tax On Your Social Security Benefits?

    Journalist Philip Moeller answers your questions about health, aging, and retirement. Phil is the author of the book, Get Whats Yours for Medicare, and co-author of Get Whats Yours: The Revised Secrets to Maxing Out Your Social Security. Send your questions to Phil.

    Tina Wisconsin: I am 64 and receive a Social Security survivor benefit. However, it is so small that I also qualify for SSI and get help from Medicaid in paying for some very expensive medications that I must take. I am considering selling my country home to move into town but am scared that the money I receive from the sale will cause me to lose my current insurance support help.

    Phil Moeller: You will not lose your coverage. However, your income may increase enough to make you no longer eligible for Medicaid and SSI. Should this happen, you would have to pay for these benefits through regular Medicare and would also lose your Extra Help supports.

    If your income and assets later declined, you could once again be eligible for your current benefits. The State Health Insurance Assistance Program provides free Medicare counseling and should have an office in your state staffed by someone who can help you.

    Phil Moeller: As youve clearly ascertained, she is in a very tough spot, and you are on the side of the angels in trying to help her.

    Let me know how things go and if she has further questions.

    Phil Moeller: There is no connection between Social Security and Part D, only Part A.

    Don’t Miss: Income Taxes On Social Security Benefits 2022

    There Are Income Limits On Earned Income But Not On Passive Investments

    If you receive Social Security benefits due to a disability, theres a strict limit on how much income you can earn each month from working before you risk losing your benefits. Still, theres no limit to the amount of unearned income you can have, which means investments can be a valuable way to build wealth.

    Social Security Can Affect Eligibility For Certain Benefits

    If you sell your house while you’re on Social Security, some types of benefits could be impacted. Specifically, if you are receiving Supplemental Security Income , you could lose eligibility for these benefits due to the sale of your home if you don’t do the process correctly.

    SSI benefits are available to older and disabled Americans with limited resources. If you have too many assets — more than $2,000 in the bank or $3,000 for married couples — you are going to lose benefits. Now, the home you are living in typically doesn’t prevent you from being eligible for these benefits. But, if you sell it and suddenly have a lot of money in the bank, this could cause a problem.

    This isn’t an issue if you use the proceeds to purchase another house, but you must do so within three months of selling your old one. And in today’s tight housing market, that could be a problem if you sell your house and can’t find another one to buy within a three-month period.

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    How Much Assets Can You Have While On Disability

    As far as assets are concerned, to be eligible for SSI, an applicant can have no more than $2,000 in assets , a figure that has not changed since 1989. If the applicant can use or liquidate an asset to pay for food or shelter, the asset will probably count as a resource against this limit.

    What can you own while on disability?

    Again, for the SSDI program, there is no limit to the amount of assets, cash, or resources you own. In addition, theres no limit to the amount of income you or your spouse makes.

    Do I lose my benefits if I sell my house?

    As a direct answer to the question being raised here, once a qualified housing benefits recipient has decided to sell his/her house, the government will presume that you earned a large enough amount of money to no longer be eligible to receive housing benefits.

    How far back can Social Security disability go?

    12 monthsLimits on Retroactive Payments The SSA will not pay you for more than 12 months of retroactive benefits. Since there is also the five-month waiting period, figuring out your retroactive benefits can be confusing.

    Investment Income Versus Earned Income

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    The SSAs calculations concerning benefits payment focus only on employment income . But the following does not count against your Social security benefits:

    • Rental property cash flow
    • Lawsuit payments

    Capital gains and other government benefit programs should also not count against your received Social Security benefits.

    So, the short answer to the Social Security benefit/rental property income question is: There isnt an impact. There is a but, however. Specifically, the rental income you receive from real estate doesnt count against Social Security benefits except for the following circumstances:

    • The rental income comes to you through trade or business as a real estate dealer
    • You participate in the management or production of farm commodities on land rented to someone else
    • You render services as a convenience for those occupying your rental property

    Lets assume that youre not a real estate dealer or broker handling rental income and you arent involved with farm management or production. But the third point needs to be examined.

    The SSA indicates that services rendered primarily for the convenience of the occupant of the premises might include:

    • Room service and laundry service
    • Furnishing linens and towels and making beds
    • Preparing and serving meals, and washing dishes
    • Sweeping and mopping floors, dusting and cleaning
    • Emptying wastebaskets and picking up/replacing misplaced or scattered articles

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    The Social Security Administrations Stance On Disability Benefits And Self

    A business cannot automatically exempt you from paying Social Security taxes if you own it. If you have a sole proprietorship, partnership, or LLC, you must include all of your business income in your individual tax return. If you made at least $400 in profits in the previous year, you will be required to pay Social Security taxes on your business profits when you file your annual tax return. If your disability prevents you from working, you can still own a business however, if the Social Security Administration determines that your work is self-employment income, you may lose your benefits. If you have paid self-employment taxes in the past, your disability benefits may be significantly reduced. It is critical that you consult with an experienced tax advisor to ensure that your company is in compliance with both federal and state tax laws.

    How Much In Assets Can You Have While On Ssdi

    An applicant for SSDI has no restrictions on the amount of money, assets, or resources that he or she owns. SSDI applicants can own two houses, five cars, and have $1,000,000 in their bank accounts. SSDI does not impose a limit on the amount of unearned income a person can bring in, such as dividends from investments.

    Read Also: What Is The Highest Social Security Benefit

    What Happens If I Sell My House And Use The Ssdi

    i am curious if i sell my house to my parents so my grandpa can live closer and i use all money from my house to purchase a home in town will i lose my disability . Buying or selling a house would have no effect on Social Security disability benefits .

    How does selling your home affect your benefits?

    Im selling my home. Will this affect my benefits? It might do, depending on which benefits you get. If youre getting any means-tested benefits where your eligibility is based on how much money you have the value of your home isnt counted if youre living in it, but money you get from the sale of it would be.

    How does sale of rental property affect social security?

    Dear Liz: I sold a rental property this year and will have a long-term capital gain of about $100,000. My normal income usually puts me in the 10% tax bracket and my Social Security is not taxed because my total income is under $25,000.

    Does Owning Property Affect Social Security Benefits

    How Social Security Should Affect Asset Allocation during Retirement

    Asked by: Wyman Hand

    No. Social Security only counts income from employment towards the retirement earnings test. Other kinds of income including income from rental properties, lawsuit payments, inheritances, pensions, investment dividends, IRA distributions and interest will not cause benefits to be reduced.

    Recommended Reading: Social Security Benefit Statement 2020 For Taxes

    Should I Sell My Investment Property Before I Retire

    The length of time that you should retain your investment property will depend on your investment goals. In general, if you’re set to make a profit upon selling, it’s wise to wait to sell an investment property until after at least 12 months of ownership. This way, you can cut your capital gains tax charge in half.

    Will Passive Income Reduce Ssi Benefits Or Make You Ineligible

    Since passive income is money earned that is not related to a work activity or your ability to perform it, most forms will not be taken into account by the SSA when they are determining your eligibility or the amount of monthly benefit you are entitled to receive.

    It is always best when receiving passive income to maintain a hands-off approach to ensure that it is not considered work on your part. This can be done by hiring managers and maintenance people to take care of your rental properties. If investing, have a money manager or stockbroker manage your account. This way the income will be earned through capital appreciation and not actually work in researching and choosing stocks.

    Read Also: Social Security Benefits Retirement Calculator

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