I have several questions about whether I am to enroll in Obama care and if I will penalized. First, my mother was worried she will be penalized for last year.

I know when you sign up for Obama Care, you are supposed to report possible future incomes.

We sold our house/building last year and she did not report that as possible future income. Honestly we did not know whether the building would sell or when it would sell. We had the building up for sale for over 2 years before it finally did sell. She was unemployed when it sold, and she is still unemployed.

Will she be penalized for not having health care even though she did get income from selling our home? Also, does she have to sign up for Obama Care this year if she is still unemployed but made money because we sold our home last year? If you could please help us that would be greatly appreciated.

I also wanted to know would I have to sign up for Obama Care. I recently quit my job and moved to a new area. I am currently unemployed but I do plan on finding a job. I actively looking for a new job, but as of right now, I am unemployed. Again, I know with Obama care you are to report possible future incomes, but I do not know how much I would be making or where I will be working.

Will I have to sign up for Obama Care, and if not, Will I be penalized?

Please help me with my concerns and inquiries. I do not want to be in trouble and I do not want to be penalized, so I am asking for your help and guidance on these matters. Thank you for your time and I hope to hear from you soon.


Answer

When you sell a home (estate) you can deduct most of that income and won't owe the 3.8% tax, unless you make over $500,000 in profit.

Here is how that works:

  • There is a 3.8% tax on investment profits (including real estate) for profits of over $500,000, or the sale of multiple estates.
  • If you have a gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse.  Tax topic 701 IRS.
  • Since you can deduct this income, it doesn't count toward your MAGI, therefore it doesn't affect tax credits.

To your second question, if you have no job then you most likely qualify for free or low cost coverage through Medicaid (depends upon if your state expanded). If it didn't, as long as you can project that you will make above 100% of the Federal Poverty Level you will get very low cost coverage that can hold you over until you find a job via HealthCare.Gov. You have to enroll during open enrollment. So time is of the essence.

When you get a job, you'll be able to drop the Marketplace plan and roll over to an employer plan if they offer one.

 

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Lee on

If I sale a vacation Home will the capital gains make my Obama Care payment go up?

ObamaCareFacts.com on

Secondary residence, so if you make a profit, and thus have to pay taxes, then yes that is taxable income that adds to MAGI. So keep that in mind.

Tim on

I do not fully understand the answer here. If a single taxpayer has a net capital gain of $200,000 above the section $250,000 exclusion, that income is not included in MAGI?

ObamaCareFacts.com on

We aren’t tax experts, just helping with this as far as we can. I think the exemption from selling a primary home does not care about other capital gains… but other capital gains may themselves affect your ability to get a tax credit.

If you read the IRS pub you’ll see there are other factors to consider here. Make sure to double check detailed tax things like this.

https://www.irs.gov/publications/p523/ar02.html

Concerned relative on

My aunt now receives Medicaid benefits in Hawaii for health insurance. She is currently 62 and has been unemployed for many years. If she sells her house will her benefits be affected? Also she mentioned that after she sells her house she would like to give (gift) the proceeds to some friends who she likes very much. She plans to live with a friend after she sells her house. How does what she would like to do affect her current medical coverage and eligibility? How will what she wants to do affect her Medicare eligibility when she turns 65? She would look to Medicaid to pay for part B coverage at that time.

Douglas McKillop on

How much tax wil I be charged for Obamacare when I sell my home?

Paul Atkinson on

I have had obamacare for 5 years, and just signed up again for 2017. My tenant wants to buy a second home I had for my son. We no longer need it. If I sell it, will I owe from the capitol gains? Or should I go without obamacare for 2017, and pay a penalty, to save for my retirement?

ObamaCareFacts.com on

If you are making a profit from a non-primary residence then yes this could offset your cost assistance and you would want to take this into account.

Julie on

My family is currently on Medicaid and we will be selling our primary home in January with a capital gain above and beyond the $500,000 deduction. As this is a one time only lump sum income and will not change our monthly income for Medicaid coverage, aside from when we receive the check in January, how do I report this to Obama Care? And, how does it impact our coverage for January and then for February and onward if we don’t have a monthly income change beyond the one time in January?

ObamaCareFacts.com on

If you are receiving tax credits then the lump sum can affect credits, if you are on medicaid it can affect Medicaid. The exact way the lump-sum income is going to effect you can differ by your situation and the state. Given this you should seek advice directly from your state Medicaid department and/or healthcare.gov to get a better sense of what your specific profit margin will mean in your specific situation. I’m hesitant to give more exact advice on such a big ticket item like this.

Cindi Fallstrom on

If I accept husky ins as it was offered and I sell my house will I have to pay it back?

Erin on

As mentioned in the answer above, you are able to deduct gains from the sale of your primary home from your income (up to $250,000 for an individual and $500,000 for married filing together). Your Premium Tax Credits are based on your MAGI which doesn’t add back in any of income from the sale of your primary home that you were able to deduct from your AGI. So unless the sale of your home nets more than those amounts (which ever is relevant for your tax filing status) you will not owe back Premium Tax Credits. If its slightly more or significantly more you should update the marketplace with this increased income or you may owe some back Premium Tax Credits.

Frank Altieri on

You reference primary home. I sold a second home that was only for personal use. I owed the home for 32 years. Will that be counted as income to repay Obamacare subsidies.

ObamaCareFacts.com on

A second home that you used for personal use follows a different set of rules than a primary or a rental property. A second home for personal use works like a primary home in terms of mortgage deduction, but works like an investment property for a sale. Thus, assuming you held the second home longer than a year (which should be the case for most people), you’ll owe the long term capital gains on it when it is sold (i.e., you owe the long term capital gains tax on profits from the sale… which means the taxable amount will affect ACA tax credits).

So you need to factor profits from the sale of a secondary home when figuring out tax credits for the year (or be ready to repay excess credits at tax time).

That is the Gist. Google “capital gains tax on second home” and “mortgage interest deduction on second home” for more reading.