Sale of rental house
My mother and stepfather gifted me their house in 2010 with the understanding that I would keep them in their home until they died. My brother had passed that year and therefore I was the only child. They passed in 2014 and 2022. I then rented the house until I turned 80 in 2024 and sold the house.
My concern is that the sale price of the house, $258,000, will cause my husband and me to have our Medicare deduction which is now $185.00 per month for each of us to a higher amount because of this increase in income in 2024. I thought there was a form to fill out that you spoke of on WGN – Irma.com (which I cannot find and I imagine is incorrect).
Any information would be greatly appreciated. Thank you.
Terry Says
Big first question: While your parents gifted you their home in 2010, did you change the title to the home back then? Or was it still in their names when they died. This will determine the cost basis. It appears that you did change title, and if so, when you sell this house, you will have a capital gain on any profits, since you held it for longer than one year.
Your “cost basis” for determining that gain is the value at the date of death (or the date of the gift, back in 2010) so you might want to find comparable sales of similar homes in that year — AND any improvements you put into the home (remodeling a bathroom, new roof, plumbing, etc). So I hope you kept good records. And if you “depreciated” the home on your tax returns during the rental years, you’ll have to add that amount back.
I know I haven’t gotten to your real question yet, but you need a CPA to help you calculate your gain for tax purposes. And then, yes, you are likely to get an IRMAA adjustment (read this: https://www.terrysavage.com/understanding-irmaa/
They look back at tax records for two years, so the IRMAA adjustment might not come until 2026, assuming this gain will be reported on your 2024 tax return. And you will have to pay it for at least one year. But then you can ask for an adjustment to IRMAA the following year — see explanation in the article — because it was a one-time income bump.