3. Ignoring the Tax Implications of Your Home Sale

Selling home after retirement can inject a massive amount of liquidity into your bank account, but it can also trigger unexpected tax consequences if you are not careful. The IRS provides a generous capital gains exclusion on the sale of a primary residence—up to $250,000 for single filers and $500,000 for married couples filing jointly—provided you have lived in the home for two of the past five years.

However, if you have lived in a rapidly appreciating market for three decades, your profits might easily exceed those limits. The excess gain will be subject to long-term capital gains taxes. More importantly, this sudden spike in your adjusted gross income can trigger an Income-Related Monthly Adjustment Amount (IRMAA), causing your Medicare Part B and Part D premiums to surge significantly two years down the line. To understand the current rules regarding the sale of a residence, you should review the official guidelines provided by the Internal Revenue Service (IRS).