Ask Terry Questions Gains on sale impact medicare premiums?

Gains on sale impact medicare premiums?

By Terry Savage on October 19, 2018 | Financial Planning / Retirement

My folks are retired living and receiving their social security. They own several properties and are considering selling one or multiple properties. My question is can selling their properties impact their medicare benefits and if so what how? Their current medical plan is an HMO which has no monthly premium. One of my parents also receives hospice care at home which we would not want to risk losing as well. thanks for your advise.

Terry Says

The capital gains on the property will be added to their ordinary income — and that could definitely impact things like Medicare Part B premiums. But if they are in Medicare Advantage (the all-in-one program), it woudln’t have an impact on premiums. BUT, it really doesn’t make sense for them to sell now and pay the taxes. Under current law if the property is an investment, and they hold it at death, there is a “step-up” in tax basis to the value of the property at the date of death. Whoever inherits the property can use that higher basis to compute any future taxes when the property is sold.

So it might be wiser to lend your parents the money they need to live, and get it back in a more valuable inheritance.

Your parents need some good estate tax planning and advice. Make sure they find an attorney in their state of residence to do the job. Contact your state bar association for a recommendation.

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