Obamacare's 3.8% Real Estate Sales Tax? True... Sort of

Obamacare's 3.8% Real Estate Sales Tax?
Obamacare's 3.8% Real Estate Sales Tax?
I was recently asked by one reader to explain the new 3.8% real estate sales tax. His hope was to make homeowners aware of the new tax before selling their home.

First of all, is there a new 3.8% sales tax on the sale of real estate, including the sale of your home?  Yes and no.   

What the reader was referring to is not a sales tax. It is a Medicare tax.

Also, it is not limited to real estate, but targets gains on investments, including homes.

It typically only affects the very wealthy. (Those in the top 3 percent of wage earners.)

According to this informational brochure developed by the NATIONAL ASSOCIATION OF REALTORS®, “Beginning January 1, 2013, a new 3.8 percent tax on some investment income will take effect.”

This new tax was “passed by Congress in 2010 with the intent of generating an estimated $210 billion to help fund President Barack Obama’s health care and Medicare overhaul plans.”
The brochure continues, “Understand that this tax WILL NOT be imposed on all real estate transactions, a common misconception. Rather, 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).”

More importantly, “The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.” 

So the Affordable Care Act imposes a 3.8 percent tax on some investment income, which includes principal residences, and typically only affects the top 3 percent of wage earners.

You can read more on the NATIONAL ASSOCIATION OF REALTORS®  Health Insurance Reform page.

Bill the Murrieta Broker
3B Realty
Bill Burchard, Broker, REALTOR®, SFR
BRE# 01864774
Bus: 951-347-3818
Email: Bill@My3BRealty.com

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DISCLAIMER: I am not a licensed CPA. To better understand the potential tax consequences of selling your property, you should consult with the appropriate professional.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.


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