There is a lot of misinformation swirling around the real estate marketplace concerning the capital gains tax on sales of houses and the funding for the new health care legislation that was passed by Congress in 2010. Rumors have been circulating that there is a 3.8% sales tax on the full sale price of real property. Nothing could be further from the truth and it is obvious that forces opposed to health care reform are continuing to perpetuate these vicious rumors. Here is a brief summary of the actual 3.8% capital gains tax on excess profits that was explained nicely by the folks at www.taxfoundation.org
There is no "sales" tax on home sales in the health care bill. The bill would impose essentially a capital gains taxes on some home sales made by a limited number of taxpayers. (The health care law contains a new 3.8 percent tax on "unearned income" for high-income taxpayers. Unearned income includes capital gains.) To be hit by the 3.8 percent capital gains tax, you first have to be a married couple making more than $250,000 in adjusted gross income or $200,000 if you are single. The capital gain on the home sale must also exceed $500,000 if this is a primary home and you are a married couple ($250,000 for singles).
For those who earn above those income thresholds ($250,000/$200,000) and who have a capital gain on a home that is a second home or one that does not qualify for principal residence (i.e., lived in for too short of a time period), the full capital gain would be subject to the new 3.8 percent tax.
Don Kanare is a Realtor at RE/MAX Premier Properties Read his blog and weekly stats on his Incline Village Real Estate web site at www.InsideIncline.com
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