Continuing to see MISinformation about the 3.8% real estate tax on ActiveRain

By
Property Manager with Gibson Management Group, Ltd.
https://activerain.com/droplet/DXX

PLEASE ActiveRain members * STOP blogging about this issue without the mention of CAPITAL GAINS.

If you are UNfamiliar with Capital Gains * PLEASE * PLEASE learn about them....they effect how many people buy and sell real estate as well as how they buy and sell stocks.

There is lots of information about this subject online and the EASIEST way to remember WHY they are important in real estate is found in this wiki-pedia entry.....Real estate sales are SOMETIMES subject to capital gains....knowing when and where is important when advising clients to buy or sell their investment and personal residence. 

 

capital gain is a profit that results from investments into a capital asset, such as stocksbonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1] Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price.

Capital gains may refer to "investment income" that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets such as goodwill.

Many countries impose a tax on capital gains of individuals or corporations, although relief may be available to exempt capital gains: in relation to holdings in certain assets such as significant common stock holdings, to provide incentives forentrepreneurship, or to compensate for the effects of inflation.

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Wallace S. Gibson is a Certified Property Manager with over 50 years of property management experience and expertise.  She maintains a specialized property management business in Central Virginia serving Albemarle, Greene, Fluvanna and Louisa counties  

LandlordWhisperer

View our available Charlottesville, Albemarle and Lake Monticello rental homes online with photos and floor plans

"...to be a Virginian, either by Birth, Marriage, Adoption, or even on one's Mother's side, is an Introduction to any State in the Union, a Passport to any Foreign Country, and a Benediction from the Almighty God...." Anonymous

 

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Rainmaker
190,666
DEBORAH STONE
Balboa Real Estate San Diego, CA - San Diego, CA

Wallace-

Most of my sales are income properties & 1031 Tax-Deferred Exchanges----you can bet I stay away from answering any tax questions------you might as well take a gun and point it to your own head--each individual has a tax liability different from anyone else---it's never a one-size-fits-all. I have a form that implicitly tells them to seek the advice of a CPA or Tax Attorney--no surprises on COE.

Jul 16, 2012 03:50 AM #5
Rainer
274,145
Robert Sole
REM Inspections LLC - Winter Springs, FL

Don't forget that the capital gains taxes are going to go way up also if the current administration has their way.

Jul 16, 2012 04:07 AM #6
Rainmaker
525,914
Dave Halpern
Keller Williams Realty Louisville East (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

It's just a first step down a slippery slope. If we continue down this slope we will become a nation of renters, as benefits of homeownership will continue to erode.

Jul 16, 2012 04:18 AM #7
Rainmaker
592,790
Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

I have a problem with capital gains being paid on a home. You pay multiple taxes to build and buy a home. It changes hands multiple times over the years and the government wants to add a tax for capital gains?

You are righ tabout the info being incorrect, but hte fact that they want to add any tax to homes sales is just another problem of our over spending government.

Jul 16, 2012 05:39 AM #8
Rainmaker
1,248,908
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

I agree that individual tax consequences of a purchase or sale should be discussed with a TAX PROFESSIONAL.  

My problem is that there appear to be ActiveRain members who do NOT know enough to know that they do NOT KNOW enough....

I've bought 5 rental properties in the last 20 years - all 1031 exchanges.....I need to know this stuff to DO MY JOB!

Jul 16, 2012 05:48 AM #9
Rainmaker
1,561,684
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I've not read the posts, but it must be annoying to read the same misinformation over and over again.  I read a lot of misinformation all the time.

Jul 16, 2012 05:55 AM #10
Rainmaker
245,267
Norm Werner
Real Estate One - Milford, MI
Helping the first time and every time

Ignorance and gullibility are the building blocks that con men and politicians use to great success. It should come as no surprise that some percentage of people who happen to call themselves Realtors display both traits.

Tis the season of misinformation in election-land and both parties are masters of playing that game.  When one has grown up in a world devoted to  sound-bite attention spans, taking the time to understand complex topics like tax laws is mind numbing. Besides that, who has the time to analyze the arguments and data being presented by both sides? Just watch TV or listen to the radio and someone will tell you what to think.

 

Jul 16, 2012 06:11 AM #11
Rainmaker
1,248,908
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Sometimes * real estate professionals are their own worst enemies....WE NEED TO STOP SCARING THE PUBLIC!

Jul 16, 2012 06:25 AM #12
Ambassador
855,525
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Anyone who asks a question about capital gains, I tell them to go and ask an accountant.  I have enough to worry about without knowing what tax laws affect their purchase or sale outside of property taxes.  I haven't read any of the posts to which you speak, but it would be interesting to see them :).

Jul 16, 2012 06:58 AM #13
Rainmaker
560,495
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

It's funny how automatic some of the comments are.  Right when taxes are mentioned many run for the hills and are afraid to talk about them. 

I think your point was that a real estate professional should be aware of and be able to talk about how taxes affect real estate transactions.  If one is going to write about the topic, be informed and know what you are talking about.  

Others  just refuse to approach the topic.  I think that's bad also.  One should be able to talk in general about the tax consequences and then make sure you advise them to seek a professional for their particular situation.

Jul 16, 2012 08:31 AM #14
Rainmaker
833,778
Kevin Mackessy
Blue Olive Properties, LLC - Highlands Ranch, CO
Dedicated. Qualified. Local.
Haven't seen too many posts concerning real estate tax. Will keep an eye out.
Jul 16, 2012 08:32 AM #15
Rainmaker
544,237
Eric Michael
Remerica Integrity, Realtors®, Northville, MI - Livonia, MI
Metro Detroit Real Estate Professional 734.564.1519

Wallace, it seems that everyone and their brother thinks that home buyers, sellers and real estate agents will ALL have to pay an additional 3.8% tax. Thanks for clearing this up!

Jul 16, 2012 09:04 AM #16
Rainmaker
3,984,969
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Scares me to think that many of these mis-informed agents are representing out Profession!

Jul 16, 2012 11:39 AM #17
Rainer
205,520
Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h
I'm scared and I don't even know what you're talking about! I don't buy/sell with my license and I haven't actually bought a home in probably 7 years or so. I'm a bit out of the loop but now I know that I better study up.
Jul 16, 2012 02:03 PM #18
Rainmaker
1,248,908
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Mark * If one of you clients has done a 1031 tax free exchange to purchase a property, they are DELAYING paying capital gains until they sell their LAST traded property.

If you hear the term BASE or BASIS, they are referring to their capital gains liability which is why investors need to know HOW to differentiate between REPAIRS and CAPITAL expenses which are added to their BASIS

Jul 16, 2012 08:07 PM #19
Rainmaker
578,591
Karl Hess
Keller Williams Shore Properties - Barnegat, NJ
on The Jersey Shore

Thank you Wallace.

As Forbes says: The new (2013) home sales tax applies only to couples who sell a personal residence: they can exclude the first $500,000 in profit from tax ($250,000 for singles). That would be profit from a home sale, not proceeds. So a couple that bought a house for $100,000 and sold it for $599,000 would owe no tax, even under the new law.

Jul 16, 2012 09:04 PM #20
Rainmaker
1,248,908
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Karl * so let's not INCORRECTLY identify the tax as a 3.8% real estate tax...it is really a TAX on capital gains....tax on a tax if you will

Jul 17, 2012 03:09 AM #21
Rainmaker
421,184
Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease

Wallace, 

Great point - that we shouldn't be scaring the public.  However, just tired of having more complexity added onto our plate that only benefits the government and accountants!

All the best, Michelle

Jul 17, 2012 05:07 AM #22
Rainmaker
1,248,908
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

http://www.forbes.com/sites/baldwin/2012/06/28/dividend-tax-up-spy-down/

This is the link to the Forbes article Karl mentions - good explanation of the tax consequences of Obamacare

Jul 17, 2012 10:00 AM #23
Rainer
51,304
Lucas Taylor
Keller Williams Miami Beach - Miami Beach, FL
Thank you for the great education. I learned so much from your post.
Aug 10, 2012 12:17 PM #24
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