If you have capital gains on the sale of your primary residence, those gains are included in your household income for purposes of Marketplace Health Insurance. However, it's possible that you would qualify for the home sale gain exclusion, which can eliminate some or all of your capital gains, making them not count for your health insurance.
This exclusion applies as follows: if you owned and lived in the home for two out of the last five years prior to the sale, you generally get to deduct up to $250k of capital gains if filing single or head of household, or $500k of capital gains if filing jointly and both spouses meet the ownership and use test.
Capital gains are generally calculated as follows:
Sale proceeds - selling expenses - cost of the property when you purchased it - cost of capital improvements.
Example:
Let's say you sold your house in 2024 for $400k, you're single, and the house cost you $100k ten years ago. Your selling expenses are $30k and you made capital improvements of $75k over the period of ownership. You've lived there 2 out of the last 5 years and haven't sold another primary residence in the last 2 years.
Your capital gain = $400k - $30k - $100k - $75k = $195k. Since this amount is under the $250k limit, none of your capital gain is taxable, and none of it gets included in your household income for 2024.
Alternatively, let's say you sold it for $700k. Now your capital gain = $700k - $30k - $100k - $75 = $495k. Only $250k of the capital gain is excluded, leaving a balance of $245k. That $245k would get included in your household income for 2024.
Here's an article that discusses the home sale gain exclusion in greater detail:
Tax Aspects of Home Ownership: Selling a Home
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