The Obamacare Tax Scare on Real Estate Sales--

Reblogger Charles Stallions
Real Estate Broker/Owner with Charles Stallions Real Estate Services

Here is a breakdown of the Obama Tax Scare when it come to Health Care written in 2011 and even then Cece called it a tax but Obama called it a penalty. Now tell me again what has he said or done to jump start Real Estate.

4 years of blaming Bush, 2 1/2 years on healthcare and 1 1/2 years on telling us how bad Mitt Romney is what will he do if I give him 4 more. Obama for President

Original content by Cece Blase

The Obamacare Tax Scare on Real Estate Sales--

A few weeks ago, I met with an invetment buyer at a little condo on Russian Hill who is active in the Nevada County real estate market. He asked me if I had details on the Obamacare real estate sales tax.  He was dead certain it was coming down the pike and was going to be in the range of 5%.

I began to hear a bit of buzz about the tax shortly thereafter, maybe because my radar was up about it. The gist of the news I got is that most people are misinformed about the details of the tax. Here's the real scoop:

When Obamacare passed, lawmakers included a provision in the law imposing a new 3.8% tax on the investment income of high-income people. High income is defined as those earning more than $200,000 a year for singles or $250,000 for married couples.

According to Census Bureau figures, that means that only about 2% of US households are subject to the tax. But even then your tax hit is limited to the  first $250,000 in profit from the sale of a personal residence for a single, or the first $500,000 in the case of married couples.

Beth Peerce, the president of the California Association of  Realtors has been swamped with calls about the bill. To address how it really works, she offered this hypothetical example of a  married couple that purchased a home in Southern California years ago for $350,000.  Let's say they sell it for $1 million after the tax kicks in (around 2013).

Their sale would normally translate to a profit of $650,000.  But the couple can immediately exclude $500,000 from their tax obligation, leaving $150,000 subject to taxation. Even then, tens of thousands of dollars in additional exemptions could be claimed for improvements to the property over the years and costs related to its sale."

The tax on the gain becomes a bigger problem for those who are selling rental property.  If you plan on doing that in a couple of years, you should find a good CPA or Tax Attorney before you put your property on the market. Once the investment closes, you won't be able to unring that bell on the capital gains tax. Proper planning, however can limit damage control and even avoid the tax if you choose to do a 1031 Exchange.

Given recent market trends in San Francisco, those who bought investment property in the last five years or so may not have to worry about a gain-- unless our market enjoys a significant rebound in the next two years. If it does, and you do enjoy a profit, you might want to count your blessings before paying the IRS piper. Profit is a high-quality problem in our stressed out economy.

Dreaming of San Francisco? Cece Blase offers local Advice to San Francisco Buyers, Sellers and Owners-- and feeds the dreams of those who wish they could live in Tony Bennet's 'City by the Bay.' Call or email at 415-577-0809 or email at


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Michelle Cooks
Charles Stallions Real Estate Services - Pace, FL
Pensacola, Pace & Gulf Breeze Property Management

What a great post - thanks for sharing.  i really enjoyed reading.  i think it will take a long time to get these thoughts out of our buyers minds.  The buyers really need to trust and listen to the professionals that are out in the market every single day.  Thank you! :)

Oct 25, 2013 08:19 PM #1
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800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

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