@CourtneyDee I am going to assume you file SINGLE.
Given your projected income, including the $500,000 profit on sale of the 2nd home, the estimated tax (federal) would be $89,000 in 2025.
1) Is SSI counted toward total income when IRS determines income? It appears this would be a difference in paying 0% CGT or 20%*. If SSI isn’t counted, does that really mean I don’t have to pay ANY CGT AT ALL since my non SSI income under $48,350?
yes, it is counted. CGT is based on the COMBINED taxable income, not just the ordinary income. so whether the SS is counted or not, you would have taxable income of more than $48,350 in any event.
2) Can you confirm that a second home does not have the wonderful $250k deduction/exclusion?
that is correct. there is no exclusion.
3) If I DO have to pay CGT on the $500,000 profit (whine!), what are my options other than get married, delay the sale, or make the house my primary residence for two years? Can I invest the $500,000 in an IRA and avoid CGT? Then slowly withdraw as I need it and pay regular taxes vs the huge hit?)? Just looking at any options or suggestions.
no options other than living in the home for two years as your primary residence. you are limited to $6,000 investment in an IRA as it's limited by your earned income (the January earnings). Do you own your primary residence? you can't take but one exclusion every two years.
4) Is CGT based on what I SELL IT FOR, or its market value?
CGT is based on the selling price, less selling expenses, less the original purchase price less the cost of improvements you made during your years of ownership. I also assume you never rented it/ depreciated it as a rental property.
5) Are my monthly SSI checks reduced because of sale of house profit?
they should not be. Since you are 67 years old you have reached the FRA (full retirement age) and your ability to earn income is unlimited. HOWEVER, you would be subject to IRMAA charges on your Medicare premiums for one year. If you sell in 2025, that surcharge would occur in 2027. That would be around $650 per month for 12 months. Just think of it as additional tax.
6) Right now, I’m not having taxes taken from SSI as I’m confused on what IRS considers taxable. I read that it is only HALF of total SSI, or am I misunderstanding that?
Putting the house sale to the side, since your income EXCLUDING Social Security is less than the standard deduction of $17,000, your SS is not taxable. That would change once you sold the second home and you presumably invested the resulting cash into something that generates income.
