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Real Estate and the 3.8% TAX on all UNEARNED!! income becomes LAW in 2013

Real Estate Broker/Owner with Note Builders, Inc. Keller Williams

Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on unearned income, including the sale of single family homes, townhouses, co-ops, condominiums, and even rental income.


Definition: Unearned income – income derived from sources other than employment, such as interest and dividends from investments, or income from rental property. Also called unearned revenue. opposite of earned income.

“I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes,” President Obama, September 12, 2008


Obama has already passed a tax increase for millionaires and billionaires. All the while asking for more.  The law is already passed in case you all missed it and the supreme court just refused to hear the case against Obama Care. So what does that mean for us Real Estate agents, Investors, Reitrement accounts, etc.??


Well you might want to think twice about a fix and flip property!

Consider a 3.8% hit off the top (gross) of all sales!

As an investor you might not want to sell that investment property unless you have to!

What do you think the value of homes will do with this across the board tax on economic activity?

How many more homes will be under water and go into foreclosure with another 3.8% in costs?

Is this going to lead to a prolonged stagnation of the economy?

Should we all become renters and abandon the American Dream?


As US citizens, Adults, Parents, Grand Parents, Real Estate Agents, Business owners, is this what you want and what you believe the American Dream is? Are you all ok with this? 

We all have to vote for what we want and believe, or we will get what we get and don't throw a fit!!


Terry Lewis is COO of Notebuilders, Inc. a third party MLO for seller financing compliance under Dodd Frank and the SAFE Act. Notebuilders.com


Posted by
Terry Lewis COO
NMLS #517367 DRE#01898702

Keller Williams, Yes Team
Owner, broker #00686433
Cell: 858-699-3139
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Chandler Real Estate Liz Harris, MBA
Liz Harris Realty - Chandler, AZ

Okay... how do we change this... not a big supporter of it and never was...

Sep 27, 2011 04:01 PM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

I guess the only way to change this is to get rid of the designer of this wonderful idea, the President. the problem is that he squandered so much money already, that we will still have to somehow kick in to compensate for what he squandered

Sep 27, 2011 04:05 PM
Terry Lewis
Note Builders, Inc. Keller Williams - La Jolla, CA
Seller Financing, Lending, Broker

We have to excersize our right to vote!

Sep 27, 2011 06:03 PM
John Marzy
Incline Village, NV

This excerpt from the Healthcare Reform bill has been grossly misstated. There is a 3.8% tax that will be imposed beginning in 2013, but it's not on the gross amount of a sale.

In fact, this provision has been so widely misunderstood and misquoted, that the National Association of Realtors produced a Question and Answer publication to expressly discuss the matter. Be sure to expressly study questions 8-10. Click to read the publication.

Essentially, it's like this:

A 3.8% tax will be imposed on high income earners (single earners with Adjusted Gross Income (AGI) over $200k, couples with AGI over $250k); that sell property realizing a gain over $250k (single) or $500k (joint filers). So .. if you're married with AGI over $250k, and you sell a piece of property with a gain over $500k, you'll pay a 3.8% tax on the gain, not the entire sales price.

I'm not a tax expert and can't speak to computation of AGI, but I suspect that there will be some fairly extensive calculations involved to minimize AGI.

Sep 30, 2011 07:10 PM
Terry Lewis

Thanks John,

I knew the tax was off unearned income not the entire sales price. The question is still valid because many people in the country have made investment decissions based on tax laws on the books for decades with little tweaks here and there. This change as well as the alternative minimum tax, the 3% hold back on gross sales price from the franchise tax board in California, possibly other States, all take their toll on the economic engine of the country. Not to mention the restrictions Dodd Frank and the SAFE Act put on an owners ability to freely excersize commerce.

Oct 01, 2011 04:38 AM