Rumors have been flying about a 3.8% real estate tax that is built into the Obama Healthcare Bill. The tax is rumored to be effective January 1, 2013. Is it true? Will you be taxed on the sale of your home at 3.8%. Yes and no, but mostly no, and here’s the explanation.
3.8% Real Estate Tax Video
3.8% Real Estate Tax Defined
“When the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income AGI) above $200,000 and couples ? ling a joint return with more than $250,000 AGI.” [National Association of Realtors]
What The 3.8% Real Estate Tax is Not
- The 3.8% real estate tax is not a “sales tax” on home sales.
- It is not an increase in the transfer tax on home sales.
- It does not affect the exemptions already in place on the sale of primary residences when the gains are less than $250,000 for an individual and $500,000 for a married couple.
- The mortgage interest deduction will not be eliminated for any taxpayers.
This means that if you’re selling your home, most likely the 3.8% real estate tax will not apply to you. When it does, it is applied in very restricted situations, and only to capital gains. Most people selling their homes these days have no capital gains, and those who do may be exempt based on income.
Last Updated on December 11, 2012 by Chuck Marunde