You might want to sit down for this.
To help pay for the new Health Care Program, There are new taxes scheduled to take effect in 2013. Some of this has been widely reported in the news media BUT some of this may be news to you.
What you may know:
Single tax payers earning over $200,000 and Married Taxpayers earning over $250,000 will have to pay a new 3.6% Medicare surcharge on all interest, dividends, royalties etc.
What you may not know:
This Medicare tax also applies to capital gains. Thus, it applies to mutual fund gains and sales etc. , stock and bond sales, In addition, it could even apply to the sale of your principal residence on all appreciation beyond the first $500,000 of gain.
Example: Bob and his spouse earn $285,000 a year. Bob sells his home for a $800,000 profit. Bob can avoid tax on the first $500,000 of gain but Bob not only pays capital gains tax on the remaining $300,000 but also pays an additional 3.8% surcharge. If Bob were selling his second home, there is no exclusion. Thus, he pays this 3.8% tax on all of the $800,000 gain. In this scenario, Bob and his spouse will pay an extra $30,400 in taxes starting in the year 2013.
This is a major bomb for those of you with substantially appreciated real estate. You might want to consider selling your home or second home before 2013.
For Property info and homes for sale in the South Bay area. Please visit my San Jose Homes for Sale Site.
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