Having survived End of the World, you might think the coast would be clear for a while. But -- at least when it comes to Central Coast real estate matters -- some would have you believe we are face-to-face with another extreme dire threat: the Internet buzz about a (gasp!) huge new federal sales tax on all real estate transactions.
This one was all over the web even before passage of the federal health care act. It has staying power, and comes in several forms. The one that circulates most often is an email message warning that a 3.8% Medicare surtax that is going to hit “average, middle-class investors” on January 1. Supposedly ALL real estate transactions are subject to the tax “no matter how low their income might be…”
If Central Coast real estate holders (in other words, most of us) are more than a little skeptical about this supposed mega-tax, you can understand why. The End of the World was also an Internet rumor, but now that it’s clear the Mayans found a whole new calendar behind the last page of their old one (giving us a welcome 5,125-year reprieve), everyone is duly cautious about these dire email warnings.
Now, I’m neither a tax attorney nor CPA, so I don’t offer tax advice -- but I can tell you that you will be relieved if you visit any of the fact-checking resources (they survived the End of the World, too!). There you will find that only a tiny percentage of Central Coast real estate home sellers would ever fall under the new tax. It touches the extreme opposite of “average, middle class” homeowners. To even qualify for the tax, a couple has to have an income exceeding a quarter of a million dollars a year (before profits from real estate are counted). Even then, when a couple sells their personal residence, the sale has to clear $500,000 of profit before the tax would apply; ($250,000 for individual filers).
Clients who might be affected by the new tax don’t need an Internet rumor to tell them to seek expert tax advice! So if you are preparing to sell in the New Year, don’t let the Web trouble you: give me a call!