The 3.8% Tax on Some Investment Income
As many people have heard and misunderstood, beginning January 1, 2013 a new 3.8% tax will be due on some investment income. This tax will affect some real estate transactions but not all, which is a very often heard misconception. Beginning in January, the law may impose a 3.8% tax on income from interest, dividends, rents (so get to deduct your expenses) and capital gains (after deducting for capital losses). This tax will only be paid by individuals with an adjusted gross income above $200,000 and $250,000 for couples filing a joint return.
The National Association of Realtors has put together an excellent brochure with numerous examples for your review. Whether you are a Realtor or a consumer concerned if this tax affects you, I encourage you to take a look at this document which I have posted on my website. Here is a link to that document: The 3.8% Tax Document It is our goal at Team Lorenz with The Wells Group to keep our clients and friends up-to-date on things pertaining to real estate. The educated buyer and seller are always the best clients.
This new tax was included as part of the health care Reform Act passed in 2010. The purpose of this tax is to raise money to help fund the requirements of Obamacare. There is an additional tax of 0.9% on “earned income” based on the same $200,000 and $250,000 limits mentioned above. That tax is also discussed briefly in this brochure.
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