Sell the House in Retirement and Medicare Bills You for It 24 Months Later.

Key Points:

• A couple sold their home in 2024 for $1.2 million, realizing a large taxable capital gain after the $500,000 primary residence exclusion, which led to a significant increase in their 2026 Medicare Part B premiums due to the two-year income lookback.
• Medicare uses Modified Adjusted Gross Income (MAGI) from two years prior to determine current year premiums, meaning 2024 income affects 2026 Medicare costs; capital gains from home sales count toward MAGI and can trigger higher income-related monthly adjustment amounts (IRMAA).
• The 2026 Medicare surcharge for joint filers increases sharply with income, with premiums rising from $202.90 to $649.20 per person per month for couples with MAGI between $410,001 and $750,000, plus additional Part D surcharges.
• The SSA-44 form to appeal IRMAA adjustments applies only to income drops caused by qualifying life events, not voluntary capital gains from home sales, limiting options to reduce surcharges from planned sales.
• Retirees should plan the timing of home sales carefully, calculate taxable gains including basis and exclusions, and budget for potential temporary Medicare premium increases due to IRMAA’s two-year lookback to avoid unexpected financial burdens.