How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask lev-tax Your Own Question
lev-tax
lev-tax, Tax Advisor
Category: Social Security
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Social Security Question Here...
lev-tax is online now
A new question is answered every 9 seconds

I am about to sell my house, I have researched and the law

Customer Question

I am about to sell my house, I have researched and the law says, since I am under SSDI,
if I buy another home within three months of closing on my home, and use all the money I made by the gain, it would be exempt, without removing me from SSDI, it would be under the $250,000.00 capital gains amount. If I just buy land to build on, will that meet the guidelines for Social Security? The other side/problem, The Trustees of my Fathers estate, in order for my sister, niece, mother and me for us to live together, they want me to let them hold on to $100,000.00 from the sale of my house, and put it it into my Fathers trust $100,000.00, so if I use all the money that is gains, is the Trust $100,000.00 cause it to be non-exempt?
Submitted: 2 years ago.
Category: Social Security
Customer: replied 2 years ago.
I also have an organization thru the ***** ***** Foundation ( Legacy Community Health ) who pays my Insurance premium each month.
Expert:  lev-tax replied 2 years ago.
Hi and welcome to our site.
The main question is regarding the type of your benefits.
If you receive social security disability benefits - based on the earning record - there is NO limitation.
But if you are getting Supplemental security Disability benefits - which are need based - then your resources are limited.
In that last case - the value of your home is excluded.
Your information is correct - if you sell your home and use proceeds to purchase another home - that is also excluded.
Specific law section is here
http://www.socialsecurity.gov/OP_Home/cfr20/416/416-1212.htm
e) Proceeds from the sale of an excluded home.
(1) The proceeds from the sale of a home which is excluded from the individual's resources will also be excluded from resources to the extent they are intended to be used and are, in fact, used to purchase another home, which is similarly excluded, within 3 months of the date of receipt of the proceeds.
(2) The value of a promissory note or similar installment sales contract constitutes a “proceed” which can be excluded from resources if—
(i) The note results from the sale of an individual's home as described in §(###) ###-####a);
(ii) Within 3 months of receipt (execution) of the note, the individual purchases a replacement home as described in §(###) ###-####a) (see paragraph (f) of this section for an exception); and
(iii) All note-generated proceeds are reinvested in the replacement home within 3 months of receipt (see paragraph (g) of this section for an exception).
(3) In addition to excluding the value of the note itself, other proceeds from the sale of the former home are excluded resources if they are used within 3 months of receipt to make payment on the replacement home. Such proceeds, which consist of the downpayment and that portion of any installment amount constituting payment against the principal, represent a conversion of a resource.
(f) Failure to purchase another excluded home timely. If the individual does not purchase a replacement home within the 3-month period specified in paragraph (e)(2)(ii) of this section, the value of a promissory note or similar installment sales contract received from the sale of an excluded home is a countable resource effective with the first moment of the month following the month the note is executed. If the individual purchases a replacement home after the expiration of the 3-month period, the note becomes an excluded resource the month following the month of purchase of the replacement home provided that all other proceeds are fully and timely reinvested as explained in paragraph (g) of this section.
You may purchase a land and build the house - that is OK - but same rules will be in effect - the money you received MUST be spent withing three months to satisfy exclusion rules.
If proceed are placed into the trust or used in any other way - they will be included into countable resource until the first moment of the month following the receipt of proceeds that are fully and timely reinvested in the replacement home.
Let me know if you need any help.

Related Social Security Questions