05/29/2026
đź“Š Capital gains from a home sale count toward MAGI for IRMAA purposes. The $500,000 married exclusion applies to capital gains tax, not to Medicare's income calculation.
IRMAA uses a 2-year lookback. A sale in 2024 sets 2026 premiums. Most people do not find out until the Social Security notice arrives after the tax year is already closed.
At a $302,000 MAGI for a married couple, Part B jumps from $202.90 to $405.80 per person per month. That is a $202.90 surcharge per person, or $4,870 per year for both, in Part B alone.
The second IRMAA tier also adds a $37.50 per person monthly surcharge to Part D drug plan premiums. For two people that is $900 per year on top of the Part B increase.
The good news is that IRMAA recalculates every year. A one-time home sale creates a one-year surcharge, not a permanent increase. If 2025 income dropped back to normal, 2027 premiums return to standard.
If income has already dropped, File Form SSA-44 with Social Security. They may recalculate using more recent income data instead of the high-income year.
Home improvements add to your cost basis and reduce the taxable gain. Documenting capital improvements made over the years of ownership lowers the gain before the $500,000 exclusion is applied.
IRMAA is a cliff, not a sliding scale. One dollar over the threshold triggers the full surcharge for that tier.
P.S. Every Friday I send a short email with the week's top post, my take on the best article I read, and what I'm writing about on the site. Link in the comments.
The content shared here is for educational and informational purposes only. It is not personalized investment, tax, legal, or financial advice. Consult a licensed professional before making decisions based on your specific situation.
