Selling land can be a significant financial decision for a real estate investor. That significance increases if the investor receives government benefits like Social Security retirement or disability payments or Supplemental Security Income (SSI).
If you receive one or more of the above, you should understand how selling land you own might impact your benefits. Failure to do so could result in unexpected financial consequences.
You’re eligible for Social Security retirement benefits based on when you were born, as evidenced by the following:
You could start receiving Social Security retirement benefits as early as age 62. However, the benefit amount you receive would be less than the full retirement benefit amount.
Social Security awards you benefits based on earned income. However, a land sale typically results in a capital gain, as opposed to earned income (wages or self-employment earnings), which is something Social Security doesn’t consider.
The exception is if the land sale is part of a business in which you actively participate, such as real estate development. In such a case, the IRS might consider the profit as earned income, which might impact your Social Security benefits.
Here’s how earned income might impact what you receive from Social Security in 2025 if you’re below FRA:
Your Social Security Disability Insurance is based on your work history and shouldn’t be impacted by asset sales. However, the Substantial Gainful Activity (SGA) limit might apply if you’re engaged in land development or business activities related to the sale. The SGA limit in 2025 is $1,620 per month and $2,700 per month for blind individuals. Any income earned while actively managing the land before the sale (like making improvements) could impact SSDI benefits.
Supplemental Security Income (SSI) is a needs-based program that considers income and assets. This means that capital gains you acquire through a land sale could reduce or eliminate your benefits.
The SSI asset limit is $2,000 for an individual and $3,000 for a couple. Selling your land could push you above that limit, potentially reducing or eliminating SSI benefits.
It’s possible to mitigate the negative consequences of land sales if you receive Social Security, SSDI, or SSI benefits. Strategies might include:
You might also consider deferring capital gains taxes through a 1031 exchange. This allows you to invest the proceeds of your land sale into another investment real estate property of equal or greater value.
Selling land can provide significant financial gains. It can also impact your receipt of government payments. Careful planning, tax-advantaged strategies, and legal consultation can help you maximize proceeds while protecting benefits.
If you want to determine whether selling land aligns with your financial goals, contact the team at Realized 1031. The professional staff can offer expert guidance on investment property, wealth management, and tax-efficient strategies. For more information, visit realized1031.com.
The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.