Over the last several weeks I’ve had a number of clients and contacts email me with a “Is This True?” question about the rumor of a 3.8% “sales tax” to be added to the sale of a home after 2012. With the passing of President Obama’s Health Care bill, some people are digging deep for every possible reason to cause panic and mayhem.
Last night I received yet another forwarded copy of this message. I’ve copied the message in the three bordered sections that follow. My response is below.
Subject: REAL ESTATE SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)
This excerpt from the Healthcare Reform bill has been grossly misstated. There is a 3.8% tax that will be imposed beginning in 2013 (if not repealed before them … and it’s under discussion) … but it’s not on the gross amount of a sale.
In fact, this provision has been so widely misunderstood and misquoted, that the National Association of Realtors produced a Question and Answer publication to expressly discuss the matter. Be sure to expressly study questions 8-10. Click to read the publication.
Essentially, it’s like this:
A 3.8% tax will be imposed on high income earners (single earners with Adjusted Gross Income (AGI) over $200k, couples with AGI over $250k); that sell property realizing a gain over $250k (single) or $500k (joint filers). So .. if you’re married with AGI over $250k, and you sell a piece of property with a gain over $500k, you’ll pay a 3.8% tax on the gain, not the entire sales price.
I’m not a tax expert and can’t speak to computation of AGI, but I suspect that there will be some fairly extensive calculations involved to minimize AGI.
[…] back in September of 2010, I wrote a blog post about an email message that was circulating regarding an 3.8% real estate tax that was included as […]