Q & A
Ask Rusty – Will My Medicare Premium Change because I Sold Investment Property? - AMAC Foundation
Dear Rusty: I have questions concerning the deduction of money from my Social Security benefit amount as relates to the sale of investment property. I am 66 years old and have been drawing Social Security since I turned 62. My wife is 56 and is a housewife and has no taxable income. Our income comes from our rental property and my Social Security benefit. I have decided to liquidate two of our properties – one was sold in December 2024, and one is in Escrow and is scheduled to close in March 2025.
My normal Adjusted Gross Income (AGI) has been running about $30K-$32K. However, last year with the sale of the property I will receive a long-term capital gain profit of about $255K. I did a rough calculation on what my AGI will be for 2024, and it looks to be about $318K. How will this affect my Social Security benefit, and will it have an effect on the amount I pay for my Part B Medicare Plan going forward? I have a Medicare Advantage plan.
My next question is about 2025 (after the next property closes and I file taxes), my AGI with the long-term capital gain profit could be between $700k-$800K. How will this affect my benefits going forward? Signed: Prudent Investor
Dear Prudent Investor: Actually, the GROSS amount of your Social Security benefit will not be affected by these transactions, but the NET amount of your SS benefit payment will change due to a provision known as “IRMAA” (Income-Related Monthly Adjustment Amount). IRMAA affects the Medicare premiums you pay from your Social Security benefit, and a higher Medicare premium will result in a lower net Social Security payment. Here’s how this will work for you:
Your Medicare premiums each year (typically for Medicare Part B and Part D) are determined by looking at your “Modified Adjusted Gross Income,” or “MAGI”, from two years prior (MAGI is your normal AGI plus any non-taxable interest you may have had). Since the property you sold in 2024 will be reflected as part of your 2024 income, IRMAA will cause your 2026 Medicare premiums to be higher than the standard monthly 2026 amount. How much higher depends on how much you exceed the income level for your IRS filing status. Using 2025 rules, if you file as Married/jointly and your taxable income (MAGI) is more than $212,000 but less than $334,000 then, instead of paying the standard 2026 monthly Part B premium, you’ll each pay $370 per month for Medicare Part B (and likely a supplemental amount of $35.30 if your Advantage plan includes prescription drug coverage).
Your Medicare premiums are recalculated every year (again based on income from two years prior). Thus, in 2027, IRMAA will also affect your Medicare premiums and your net Social Security payment because of your 2025 real estate transaction. If your MAGI in 2025 will be over $750,000, then IRMAA will increase each of your 2027 Medicare Part B premiums to $638.90 (and likely also add a supplement of $85.80 per month each to your Medicare Advantage premium for prescription drug coverage).
The good news is in 2028 all of this will be behind you and your Medicare premiums will revert to whatever the standard monthly premiums are for that year (because your income levels thereafter will presumably be below the then-IRMAA thresholds).
For reference, here is a link to Medicare’s information on the Income-Related Monthly Adjustment Amount, or “IRMAA:”
https://www.cms.gov/newsroom/fact-sheets/2025-medicare-parts-b-premiums-and-deductibles
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.