Can You Sell Some Assets if You Have Too Much to Qualify for SSI?

Supplemental Security Income (SSI) is a needs-based, federal benefit program for seniors and people with disabilities operated by the Social Security Administration (SSA). To be eligible for SSI benefits, you must meet Social Security's strict income and resource limits.

Even if your income is below the SSA's limits, you won't qualify for SSI if you have too many resources (assets). But Social Security allows you to sell some of your assets—and you may be able to collect conditional SSI payments while you do. Of course, selling assets will put cash in your pocket, which can continue to keep you from being eligible for SSI. But you'll be able to qualify if you spend the money on items that SSI doesn't count as resources or if you're able to save the money in a special account or trust.

Here's what you need to know about selling property while on SSI.

What Are the Resource Limits for SSI?

Even if Social Security determines that you're disabled, owning excess resources can prevent you from getting SSI benefits. To be eligible for SSI, you can't have more than $2,000 in resources (if you're single). Married couples can't have more than $3,000 in combined resources. But not everything you own counts as a resource.

What counts as resources? Resources are anything you could use to pay for your living expenses, including assets that you could sell. (20 C.F.R. § 416.1201.) Examples of resources include:

• cash
• money in checking or savings accounts
• real estate other than the home you live in
• vehicles (other than one car)
• non-sentimental jewelry and other items held for value or investment
• stocks and bonds, and
• retirement funds.

Learn more about what counts toward the SSI resource limits.

Fortunately, Social Security may pay you conditional disability benefits while you're trying to sell your excess assets.

Receiving Conditional Benefits While You Sell Some Assets

Social Security has developed a program that allows people with too many resources—who would otherwise qualify for SSI—to sell their excess assets. You can collect SSI benefits (called "conditional benefits") while you try to sell your excess resources. (20 C.F.R. §§ 416.1240-1245.)

How Long Can You Get Conditional SSI Benefits?

Under this program, you can get up to three months of conditional SSI payments while you try to sell personal property, like a second car. (You can get one three-month extension to sell personal property if you can show a good reason it wasn't sold.)

And if you're lucky enough to own real estate other than the house you live in, you can receive conditional SSI benefits for up to nine months while you're trying to sell it.

What If You Can't Sell Your Real Estate?

If you've been unable to sell a piece of property that puts you over the SSI resource limit, Social Security might allow you to continue to receive SSI payments beyond the nine-month time limit. But to continue getting benefits, both of the following must be true:

• you haven't been able to sell the property, and
• you can show that you've tried your best to sell the property.

Social Security won't count the value of the unsold property as a resource as long as it remains unsold and you continue in your efforts to sell the property. And Social Security won't make you use these extended benefits to repay your conditional benefits.

You're required to let Social Security know about any offers you get to buy your property. If you turn down an offer, you'll need to explain why the offer was unacceptable. Social Security expects you to accept any offers for at least two-thirds of the latest estimate of current market value, or to be able to show why the offer wasn't reasonable.

If You Own Your Property Jointly With Someone Else

If you hold any real estate (other than your home) with someone else, Social Security has specific rules on whether you need to sell that property to qualify for SSI. If the value of your share of a piece of real estate would put you over the asset limit, you'll have to sell it unless a co-owner refuses to sell it. However, a co-owner can't refuse to sell shared property if it's owned as a "joint tenancy."

In the case of a joint tenancy, where a co-owner can't legally stop a sale, Social Security will require you to sell the property unless selling it would place an "undue hardship" on a co-owner. You won't need to sell real estate if selling the property would cause a co-owner undue hardship because they'd no longer have a place to live. (20 C.F.R. § 416.1245(a).) In that case, Social Security won't consider the joint property a countable resource. But that changes if the joint owner moves or dies. If that happens, Social Security would count the property as an asset, and you'd have to try to sell the property and apply for the conditional benefit program to receive SSI benefits.

How does Social Security value your share of co-owned property? When you own property in joint tenancy with someone else, SSI will consider that you own the entire property. If you have only a partial interest in some property—for example, an ownership interest in a family home along with other family members, and you don't hold the property in joint tenancy—SSI will determine how much your individual ownership portion is worth and count that as an asset.

Do You Have to Pay Back Conditional Benefits?

The conditional benefits you receive are treated as "overpayments" because you weren't technically eligible to get SSI benefits during the time you received them (you were technically over the resource limit during that time). So, once your personal property or real estate is sold, you usually have to use some of the net proceeds from the sale to repay the conditional benefits you received during the three- or nine-month conditional payment period.

You can keep any of the sales proceeds that wouldn't put you over the SSI asset limit of $2,000 or $3,000. And you only have to pay back the amount of conditional benefits you actually received. This can get a bit complicated, so let's look at an example.

When You Don't Have to Repay All the Conditional Benefits You Received

Let's say you sell your vacation cottage for $200,000. If you still owe $180,000 on the mortgage, your net proceeds would be $20,000 (minus the costs of the sale, which are another $10,000). Do you have to give the SSA the full $10,000 to repay the conditional payments you received? After selling your property at its current market value, you might not have to pay back the entire amount of conditional benefits paid to you. (20 C.F.R.§ 416.1244.) You get to keep the amount necessary to raise your total assets to the SSI limit, and you don't have to pay back more than you received in conditional benefits.

If you're single and only have $500 in countable assets besides the property you sold, $1,500 of your sale proceeds would be protected (because keeping it wouldn't put you over the SSI asset limit of $2,000). In the example above, that would leave $8,500 in net proceeds that you'd be required to use to repay the conditional SSI benefits to Social Security.

But, of course, you don't need to pay the whole amount back if the remaining proceeds are less than the amount of conditional benefits you received. You only need to pay back the amount of the conditional benefits you received. Putting these rules together, Social Security only requires you to pay whichever of the following is less:

• the amount of the conditional benefits you actually received, or
• the amount by which your new countable resources exceed the SSI asset limit.

Using the example above, you get to keep $1,500 of the sales proceeds because they're under the SSI resource limit, giving you a pot of $8,500 to pay back any conditional benefits. Say you received $800 per month in conditional benefits and it took you eight months to sell the property; you received a total of $6,400 in conditional SSI benefits. That's how much you'd have to pay back to Social Security after selling the property. This means you'd get to keep the remaining $2,100 cash from selling your cottage ($8,500 - $6,400). However, that $2,100 would count toward your total assets and put you over the SSI resource limit, so you'd need to "spend down your assets" by buying items that Social Security doesn't count toward the resource limit.

What If You Sell the Property for Less Than the Market Value?

If you sell property for below its market value to a friend or family member, Social Security will make its own determination of the property's value. Social Security can add an amount to your resources to count the amount you should have received in the sale, if you had sold the property at its fair market value. And Social Security will assume you have that extra amount of money available to pay back the conditional SSI benefits you received.

Also, if you purposely sell property for less than its market value (or give it away), you can lose eligibility for SSI benefits for up to 36 months (called the period of ineligibility). How long your period of ineligibility will last depends on the actual value of the property you sold or transferred.

(Learn more about how transferring assets can affect your SSI eligibility.)

Selling Personal Property to Qualify for SSI

To qualify for SSI, you'll likely have to sell:

• automobiles beyond one car that you drive
• jewelry and gems that you don't wear and don't hold family significance
• clothing that's owned for its value or investment
• collectibles
• stocks, or
• savings bonds.

Remember, you can own one vehicle without it counting against your resource limit. And wedding rings and engagement rings don't count toward the resource limit.

Social Security doesn't require you to sell items that don't count toward the SSI resource limit.

Selling Real Estate to Qualify for SSI

Real estate includes property such as:

• land
• buildings
• condominiums, and
• homes (including mobile homes).

You can keep the home you live in without it being counted against your resource limit. But if you have a second house, you'd need to sell it to qualify for SSI benefits. Of course, the money you make from selling the house would likely put you over the asset limit, unless you spent it on noncountable assets. (See below for ideas.)

While you're trying to sell real estate, Social Security will contact you every three months to make sure you're really trying to sell it. If you're single and your equity in the property is $2,000 or less (or if you're married and the equity in the property is $3,000 or less), Social Security will only contact you every six months.

What Happens After You Sell Your Property

Once your property is sold, you'll have to repay any conditional benefits you received while waiting for the property to sell, as discussed above. If the proceeds from the sale of your property or other resources put you over the SSI resource limits, you won't be eligible for SSI. But if your resources are under the limit, you can begin to receive regular SSI payments.

How to Apply for Conditional Benefits

To take advantage of the conditional SSI benefits program, you have to file an "agreement to sell" application with Social Security. The SSA must accept the agreement before you can get benefits. The application is called Form SSA-8060-U3 and is available at your local Social Security field office.

The application requires that you list the estimated market value of your personal property or real estate and an estimate of your proceeds from selling the property. The form also requires that you agree to sell the property for its highest possible value and to notify Social Security within five days after the property is sold.

Placing Your Assets Into a Trust

Instead of selling your assets, you may be able to place your assets, such as real estate, into a trust. Some types of trusts, such as a special needs trust, can help you become eligible for SSI. But not all trusts qualify. Learn more about how to use a trust to maintain your SSI eligibility.