3.8% Real Estate Tax Myth
Have you heard the "rumor" about the 3.8% real estate tax? If not, then please allow me, your Richmond Realtor, to try and explain what it REALLY is rather than what the masses are making it out to be. You know how it goes at a party: one person will whisper something to another, and then they relay that information to a friend, that friend tells someone else and by the time it gets back to the originator, the story is fiction based on fact. Thus, the 3.8% real estate tax myth.
Is there a 3.8% real estate tax? No. Kind of. But, it only pertains to a certain demographic and even if you are within that minority, the effects are minimal. Here is the low-down:
Next year in 2013, there will be a new MEDICARE tax on capital gains. This new MEDICARE tax only applies to those who make an income above $250K and those who sell real estate with a profit of more than $250K for an individual or profit of more than $500K for a couple. If this is you, then you may* be charged an additional 3.8% capital gains tax on the profit above the $250K/$500K mark.
Even if this does affect you, the reality is that the tax rate isn't going to break the bank. The August/September issue of Commonwealth Magazine by the Virginia Association of Realtors provides this example: "So let's say you are wealthy. You and your wife bought a house back in the day for $200K and sell it for $725K today. That's $525,000 profit....your extra tax? Wait for it - $950." As you will probably agree, if you are making such a substantial profit, this little amount of tax will probably not mean that much to you.
Don't get me wrong, we ALL like to save a buck or two. Just ask the author of The Millionaire Next Door. However, the 3.8% real estate tax myth needs to be debunked so that home buyers and sellers can make educated decisions when it comes to entering the Richmond real estate market.
Ready to explore your Richmond real estate home buying or home selling options? Contact me, your Richmond Realtor at Home Sweet Henrico with Keller Williams Realty Richmond West, and let's get started!
*I am a real estate agent and not a tax professional. For further information, please contact a tax professional as each transaction will have different elements to it.
**Originally published at: http://homesearchrichmondva.com/3-8-real-estate-tax-myth/
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