There seems to be a lot of confusion about a new tax that may be coming on January 1, 2013, assuming the Health Care Bill is not repealed.
This is part of the monster Health Care Bill that the Democratic lawmakers decided at the last minute to add a new 3.8 percent tax on the net investment income of high-income persons.
The confusion is that many reported that this would be 3.8% on the entire sales price.
That would amount to a $15,200 tax on the sale of a typical $400,000 home. This is not accurate.
First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it.
And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their primary home. However, this exemption will not apply to investment or 2nd homes.
I can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. I do hope this helps.
The National Association of REALTORS is working to get it repealed, before it takes effect.
I just hope that they don't tax me out of a career that I enjoy very much.
