A friend in California sold her house & was told she had twelve months to find a new house, during which time her benefits would be untouched. Now she calls to report that she has not found a new house ten months later and they tell her she only had three months. Yet she was told she had twelve months both times she sold a house. Who told her correctly?
Thanks.
Did she retire at 62?
She has never been employed due to a learning disability and is under 62.
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I know this is FQ, and I don’t know anything about SSI.
First, maybe they are saying she has 3 months left before buying a new house? The 12 months looks to me like the amount of time to do a 1031 Exchange, where you can sell property, and if you roll the proceeds into a new property within 12 months, there are no tax effects.
If she sold the property and had a substantial gain, that income in one year could put her above whatever SSI limits there are. However, if she rolls it into new property within 12 months using a 1031 exchange, then it won’t show up as income.
So, that’s the general case, for selling and buying property, but I don’t know the SSI rules.
Im guessing that this has to do with SSDI (disability) and limits to cash on-hand.
That was a good look at the situation, we are not sure it applies but will check.
A little bit off topic but you might see if your friend is eligible for a STABLE account. My brother is mentally disabled (I’m his guardian) and the STABLE account has allowed us to shield a lot of money from the Medicaid limits.
This appears to be the relevant section of the Social Security Program Operations Manual:
From that page:
When an individual sells an excluded home, the proceeds of the sale are excluded resources if the individual:
- plans to use them to buy another excluded home, and
- does so within 3 full calendar months of receiving them.
Looks like whoever told the friend 12 months was wrong. Ouch.
The effective length of time is likely variable. The representative payee for the SSI files an annual report updating the recipients financial status. If the report was filed just before the house was sold, then there could indeed be almost 12 months before the SSA finds out about it.
A disability lawyer is definitely needed.
If I remember right you need a prospective property in 45 days and in contract in 120 days. I may be wrong about the times but I do know from experience it is no where near 12 months.
Really? You could be right. Maybe 60 days for the prospective property? I need to bow out of this FQ thread, I guess.
Anyway, it looks like it falls under some other SSI rule anyway.
It has nothing to do with taxes or capital gains. SSI is a means-tested program and has income and asset limits. The asset limit is $2000 for an individual. There are certain assets that are excluded, one of which is the recipient’s principal residence and the land it sits on. Once that residence is sold , the funds are treated like any other funds unless the plan is to buy another residence which is actually bought within three months. And since the proceeds are going to be more than $2000 and the exclusion can be revoked retroactive to the date the funds were received , this may mean repaying benefits received between the date the funds were received and the date SSA finds out about the sale.