Did you know that? Lately I have been asked from frightened selling homeowner customers who approached me with this question: “Do I have to pay an additional 3.8% tax when I sell my home?” The answer is “It depends but it may only affect you in 2013, onwards.”
Naturally, leave it to our Legislators to create a cluster f…ed up puzzle that they can’t even understand themselves less explain it properly to the media so it can be reported ”incorrectly”.
It has been misinterpreted by both National Media and bloggers who called it a “real estate transaction sales tax of 3.8%” followed by examples such as this one: “If a homeowner sells his/her house for $400,000, he will have to pay $15,200 to IRS at closing.
RELAX! As explained by Chad Bordeaux, a Certified Public Accountant and Certified Fraud Examiner residing just outside or Charlotte, NC in Lake Wylie, SC., Chad clarifies that “this provision of the healthcare bill actually does is that it creates an additional “unearned income” tax for Medicare that begins in 2013. As Washington increases its attack on the upper middle class and others it considers “rich,” it has decided to collect a little bit more of their investment income from real estate and other transactions. As such, the new provision only applies to individuals earning over $200,000 or married couples earning over $500,000.”
So, if you paid for your non-primary residence $250,000 and sold it for $350,000, you will pay $3,800 tax but if you sell your primary residence, the regular capital gain exemption will apply ($250,000 for an individual or $500,000 for a married couple). However, if you sell at a capital gain exceeding those exemption amounts, the 3.8% tax will apply ONLY on the overage profit.
Take a deep breath, compose yourselves and start bombarding your Legislators, Senators, Congressmen and whomever you can write to to protest this unfair tax.
If “pro“ is for positive and “con” for negative, then, it is fair to assume that the opposite of progress is Congress.