Federal health care legislation imposes a 3.8% tax on homes sales!
By: WA Realtor Association
FICTION! An article is still circulating that mischaracterizes and overstates what is actually in the recently passed legislation. Here are the facts.
There is a new 3.8% Medicare tax for "High Income Filers" that goes into effect January 1, 2013. The tax is on unearned income and will apply ONLY to single filers with more than $200,000 of Adjusted Gross Income (AGI) and joint filers with more than AGI of $250,000. Unearned income includes interest, dividends, capital gains and net rents. Keeping in mind the income limitations above, real estate income that will be affected for high-income filers includes:
By: WA Realtor Association
FICTION! An article is still circulating that mischaracterizes and overstates what is actually in the recently passed legislation. Here are the facts.
There is a new 3.8% Medicare tax for "High Income Filers" that goes into effect January 1, 2013. The tax is on unearned income and will apply ONLY to single filers with more than $200,000 of Adjusted Gross Income (AGI) and joint filers with more than AGI of $250,000. Unearned income includes interest, dividends, capital gains and net rents. Keeping in mind the income limitations above, real estate income that will be affected for high-income filers includes:
- Sale of a primary residence: If the gain from the sale of the property is below $250,000 (individual)/ $500,000 (couple) NO tax will have to be paid on the gain. The new Medicare tax would only apply to any gain realized over the $250K/$500K existing primary home exclusion that will bring the filers AGI over the $200K/$250K limits.
- Second Home/Investment property: The additional 3.8% tax will apply to the portion of the gain realized on the sale of a second home or investment property that will bring the filers AGI over the $200K/$250K limit.
- Rental Income: The portion of net rental income that exceeds the $200K/$250K AGI limits will be subject to the new 3.8% tax.
