The news media never passes up a chance to freak out the real estate market with scary headlines. The fact of the matter is that MOST sellers will not be subject to the new tax that begins January 1, 2014. The new 3.8 percent tax on some investment income will affect some real estate transactions, but not MOST.
Thank you Obamacare once again right? It's the gift that keeps on giving. The new tax was passed by Congress in 2010 to help fund Obamacare by generating an estimated $210 billion.
The new tax is 3.8% on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses).
The new tax will affect only individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.
Here's how the new tax will be calculated: It will be the lesser of investment income amount in excess of AGI over the $200,000 or $250,000 amount.
I am a real estate sales associate, not an accountant or tax professional. So before you decide against listing your home for sale or altering your plans because you want to avoid the new tax, consult with your accounting or tax professional to be certain of whether or not you will be subject ot the new tax at all.
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