Ask The Experts: Retirement

By Reg Jones

Benefit reductions from home sale

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Q: A friend told me that her monthly Social Security benefit was reduced by $250 because of the profits made from the sale of a house that she inherited from her mother. Can this be true?

A: The Social Security earnings limit only applies to earnings from wages or self-employment, and then only for those individuals who haven’t reached full retirement age. In the ordinary course of events, income received through the sale of a home wouldn’t be considered to be earnings. However, if she reported any portion of the proceeds as earnings on her federal income tax return (because she served as a real estate agent, for example) that amount would be subject to the earnings limit.

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  1. Jen Says:
    December 27th, 2010 at 3:47 pm

    I have seen this question twice now and I keep wondering if the person had their social security payments reduced becasue they owed taxes on the sale of the house and the IRS garnished the SS payments. I can’t see any other reason this person would say that otherwise

  2. Claims Rep Says:
    December 28th, 2010 at 12:15 am

    The friend was probably hit with IRMA because her increased Adjusted Gross Income. She probably paid more in Medicare part B premiums and it seemed as though her SSA was reduced. She may be able to appeal it if she has a Life Changing Event and a lower expected income in 2010. If not, the premium will probably go down in 2012 because it will be based on 2010 AGI instead of 2009 when she sold the house.