Is a home sale capital gain within the federal exclusion limit of $250,000 considered income when applying for subsidy? i.e. if I sell my home in 2016 and the net capital gain is under $250,000, will i be required to repay any subsidies grated to me for 2016 when I file in 2017?


Capital gains from the sale of your primary home under $250,000 can be excluded and don't affect subsidies. The exclusion is $500,000 for a family.

Since the money is excluded from your taxable income, it doesn't get added in to household income (which subsidies are based on). The rest of the money is taxed at 3.8% and counts toward subsidy income (that tax, a Medicare tax, was created by the ACA and applies only to dollars over the exclusion amount; it is owed to the federal government for the year you sell the property along with the standard capital gains tax on dollars over the exclusion amount).

Capital gains (in respect to the sale of a primary home) = the profit you made from your house, not the total amount of money you get from your home.

Please note that other capital gains (such as from stocks) generally count toward income (unless another exclusion applies).

The above is only true if you qualify for the exclusion. See this page for more details, see IRS for official information.

Publication 523 - Main Content

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bob on

Answer Rating:

I do not completely understand when you say “the REST of the money is taxed at 3.8% and counts as income”? Does REST mean capital gains in EXCESS of the $250K? on

For an individual selling a primary residence profit in excess of $250k ($500k for a family) can be excluded from taxable income. (will rephrase the answer to ensure it says profit and not just income). Profit on real estate investment (even primary after the excluded gains) = capital gains.

Maria on

Are you sure about the accuracy of this answer? I called the number provided by the Healthcare Government as well as consulted my CPA and was told I have to return all subsidies received (I was unemployed and had to sell my house, primary residence for over 15 years, and under the 250k limit). If there is any written explanation by the IRS or Healthcare Gov? Thanks! on

So as a non-professional free advice online site, that is not taking liability for mucking this up. This is what our research showed. Here are the rules as per IRS publication 523:

So it should be $250,000 excluded from taxable income and thus excluded from MAGI.

Mm on

Capital gaiin is added to your regular income for on

Capital gains is part of your taxable income, so it does count, but there are exemptions, such as with your primary home.

Art on

I am 58 and want to retire early. Will I be able to get Obama care till I turn 65 if my income is only 28K per year? on

Yes, as long as your income is above 100% of the poverty level and below 400% you’ll have access to marketplace plans with cost assistance until you qualify for Medicare.

MCG on

HI there! I have a rental property I am thinking of selling. I have not lived in the property over the past five years, it has been strictly a rental property. Is the sale of this property included as income? If the sale of the property is included as income I will no longer qualify for a subsidy. What happens next? Would I then look up what the rate is for someone with the income I made from the sale of the house? Please advise.

Patsy Vander Schaaf on

So do I understand it correctly that capital gain income from other sources is considered income? My daughter’s only income next year looks to be around $13,000 from capital gains. This would be considered income, correct?

[email protected] Erin on

All Capital Gains are included when calculating income for the Affordable Care Act. This is because the income being considered for cost assistance (Premium Tax Credits and Cost Reduction Subsidies) is based on your Modified Adjusted Gross Income (MAGI) and not your Adjusted Gross Income (AGI). Here is information about how to calculate MAGI.

Julie on

How would a home sale capital gain effect Medicaid eligibility as it is a one time only lump sum gain occuring in a single month. Does it get reported in the month received and then the next month report the return to original income that placed the individual or family in Medicaid eligibility?

Denise on

Will the profit from a second home sale be considered income when calculating yearly income for Obamacare income qualifier? on

Yeah, profit from the sale of any property that isn’t your primary home (or otherwise exempt) is counted as income. Those capital gains are counted in your household income (thus affects ObamaCare cost assistance).

Nancy Gullickson on

I am joint owner of my Fathers home. As he is terminally ill will the sale of this home be considered income for Obama Care? Note, this is not my main home. on

If you sell a home that isn’t your primary home and then you claim the capital gains, then that income will be counted toward your MAGI income and therefore it will affect tax credits under the affordable care act. You should therefore take this into account. You can call the marketplace for further direction to better understand the impact.

gloria pomilia on

Question Regarding,
“Since the money is excluded from your taxable income, it doesn’t get added in to household income (which subsidies are based on). The rest of the money is taxed at 3.8% and counts toward subsidy income.”

Taxed 3.8% by whom? By Affordable Health Care? Fed Gov?
Capital Gains tax is higher than that, right? So double taxed?

?? on

That tax, a Medicare tax, was created by the ACA and applies only to dollars over the exclusion amount; it is owed to the federal government for the year you sell the property on

That tax, a Medicare tax, was created by the ACA and applies only to dollars over the exclusion amount.

It is owed to the federal government for the year you sell the property along with the standard capital gains tax on dollars over the exclusion amount.

It isn’t a double tax, it is an additional tax on profits from primary home sales over the exclusion amount or from investment properties.

The idea being that you are paying into the public program that we all have access to, Medicare, when you have substantial profits from a home sale.

In practice, taxes can always be frustrating and in some regions homes are so expensive this one can end up being costly. Still, that is the logic.

Lou Albertini on

How much will it cost us a month to keep out gold plane
FL blue cross,
Based on a 48k yearly income.

Thank you on

I can’t give you an exact price, but basically you qualify for cost assistance on your 2020 gold plan based on the 2019 poverty level.

That said, the best way to check the exact price is

Toni Allen on

My mom has Obamacare for insurance. My father passed away 2 years ago & then my grandmother passed away last year leaving her house essentially to my mother. If my mother sells the house will she have to pay for a higher insurance or lose her insurance? on

If that is her primary residence then she can qualify for the exclusion. See a tax professional to learn how to take the right steps to ensure it is excluded from income due to being a primary residence. Otherwise, this could result in taxable income which would impact ACA cost assistance.

Mike Bo on

We were told that because we had $0 income and qualified for Expanded Medicaid, we did not qualify for any Obamacare subsidy. So, now we are under 65, filing jointly, on ACA Expanded Medicaid, and want to downsize our primary residence of 10 years – say from a $300k home to a $200k home – reducing real estate taxes and netting $100k which we would add to an IRA. Is that $100k considered income or is it under the $500k excluded per IRS rules? Would this $100k received in one year knock us off of the Expanded Medicaid program? Are there any concerns about asset attachment? In other words, will govt ever try to recoup the cost of benefits we received under Expanded Medicaid from our retirement assets / estate? on

I would consult a tax professional, as you are dealing with a sum of money that warrants it. But as a rule of thumb, all taxable income counts, and all non-taxable income doesn’t in states with Medicaid expansion under the traditional expansion rules. However, things can be a bit more complex in states that filed waivers. So, in short, in a traditional expanded state income excluded from AGI does not count and therefore does not impact eligibility…. as expansion is based solely on taxable income.

Mike Bo on

Regarding ACA Expanded Medicaid. We are in Illinois, if that helps. Based on your previous answer, it sounds like $100K net from the sale of our home would be excluded for purposes of income, which is great. However, you didn’t address “asset attachment” – the state attempting to recoup the cost of our medical care, procedures, tests, prescription drugs, etc – that we received from ACA Expanded Medicaid. I know this usually affects people in long term care facilities, but I’ve also read that states are obligated to try to recover ALL costs from Medicaid recipients. Is this also true for ACA Expanded Medicaid? Do we need to be concerned that a lien will be put on our home or collection attempted against our IRAs, social security income or estate? Should we get private insurance ASAP to avoid racking up any additional liabilities? on

It does not apply to all care. Only very specific care like long-term care. And it is recovered in the amount spent after death from certain types of assets and with other rules. It is a very specific rule that you can learn more about by researching “Medicaid Estate Recovery.” It is real, but you won’t just be racking up debt with the state by having Medicaid and accessing routine care, procedures, emergency care, tests, drugs, etc as a rule of thumb.

Dean on

Do capital gains tax long-term count against Obamacare if taxed at 0% on

Long and short term capital gains taxes impact taxable income in terms of what is counted, yes. This is true even if they are taxed at 0%. The rule-of-thumb is that if it is taxable, it is counted, the rate you are taxed at doesn’t really matter.