Have you heard the horrible news? Starting in 2013, all real estate sales transactions will be charged a 3.8% sales tax as part of the new healthcare legislation! If you've heard about this you are not alone.
According to this common email going around the internet these days this new sales tax would mean that if you are going to sell your home for $500k you would owe the government an additional $19000 in taxes. The implications to the real estate community are astounding. It would take an already depressed sales market and make it worse! Yikes!
You have to love the internet, right? First of all, rest easy.. it's not true. Well, not exactly.
The origins of the email ARE rooted in the recently passed Patient Protection Affordable Care Act (PPACA) which calls for "high income households" to be subject to a 3.8% Medicare tax on investment income starting in the year 2013.
So YES, there is a new tax coming and YES it is part of the HealthCare Legislation.. but NO it is not specific to real estate.. and NO it's not likely to affect as many people as it seems. It IS NOT a sales tax, BUT IS IT ABSOLUTELY ridiculous? I think YES.
Regardless of what I think, here is the breakdown:
* "High income households" are defined as $250k for couples and $125k for individuals.
* It only effects "net investment income" which typically means excess of interest payments, rents, dividends, annuities, and some business income. It's a lot of stuff, but it is not specific to your home although the sale of your home (especially investment property) could be an overall factor.
* Specific to home sales. There is a capital gains exclusion for the sale of a primary residence that allows a "high earner" to sell for a profit of 500k per couple and 250k for individuals. You are only taxed the additional 3.8% on amounts above this threshold.
So is it likely to affect us? Maybe not everyone but the question remains... what is a increased capital gains tax doing in a HealthCare bill to begin with?
Let me know what you think my website is: http://www.biltmorebranch.com/ or shoot me an email at EMiller@PeoplesMortgage.com
Thanks for reading. I couldn't find anything funny to add in this weeks blog... but since there is so much fighting going on in Wisconsin right now with Gov. Paul Walker.. I figured I would provide a video of another awesome Walker you may have heard of ... WALKER Texas Ranger! I say send Chuck Norris in and settle it once and for all!
And to answer your question... Yes, I believe it IS a Union Guy. SAG.