I'm selling my house this year, after living in it for 11 months. I'm on schedule to make a profit of $70K. My issue is that I'm self-employed as a mental health therapist and normally earn about 30K per year. This has allowed me to use the healthcare marketplace for health insurance while getting a subsidy, because I definitely earn less than $54K per year with my job. If I didn't get the healthcare subsidy, I would be paying $500-600 per month for health insurance that I rarely use anyway. I'm concerned that with my house sale, I'm going to have to pay all that health insurance cost back for 2021. It will be at about $6,000 - $7000. I definitely qualify for the partial exclusion of gain since I'm moving about 1900 miles away, and there are a few other factors that help me to qualify. So my question is, with the partial exclusion of gain, will the IRS even consider my house sale as income? Also, does the partial exclusion waive up to $125K of income from my home sale? Or does it only tax me on 50% of the income from my home sale (for example, if my 1099-S shows a profit of $70K, does the IRS tax me on $35K, or does it not tax me at all if I qualify for the exclusion)?
