The Tax Planning Countdown to 2013 Starts Now!

by Clifford A. Hockley

As we begin 2012, all real estate investors need to pay very close attention to the ever changing tax landscape.  Particular attention needs to be paid to the significant tax increases slated to occur in 2013.  

 

Investors considering whether or not to sell and pay their taxes, or sell and 1031 Exchange, must consider the year-over-year tax implications. Real estate investors will have a much greater tax burden in 2013 than in 2012.

Tax Rate Changes for2012 and 2013

     
2012
2013
Ordinary income
35%
39.6%
Qualified Dividends
15%
39.6%
Capital Gains Tax
15%
20%

Medicare Tax

Beginning January 1, 2013 a new Medicare tax of 3.8%  will be applied to investment income of those investors with a modified adjusted gross income of over $200,000 ($250,000 for couples filing jointly).  The tax applies to the lesser of the (1) total investment income for the year, and (2) the amount by which the individual’s total income exceeds the threshold.  For example a single individual taxpayer who has $150,000 of investment income and $125,000 of other income will pay the new Medicare tax on $75,000(the amount by which the individuals’ income exceeds the $200,000 threshold. Because the threshold amounts for the new Medicare tax are not indexed for inflation, more taxpayers will be subject to the new Medicare Tax over time.

 

Kim Carlson 

GRI, e-PRO, Green, CIAS

Certified Investor Agent Specialist

Keller Williams Integrity First

(480) 993-9384 Cell

(480) 776-8393 Fax

   

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Direct: 480-559-9609

call Brandon Valero at (602) 620-6206

Or Online at www.ApprovingAZ.com 

 

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