New Health Care Bill Creates Home Sales Tax Effective 2013

By
Real Estate Agent with Century 21 Manausa and Associates BK3009719

 

Paul Guppy article about tax on home salesUnder the new health care bill, there is language that is going to cause some people to have to pay sales tax when they sell a home. When the new law was passed back in March, most people heard about the 3.8% Medicare tax, but most did not see the connection to a tax on home sales and how it would impact most Americans after it is implemented in 2013.

In an article published by the Spokane Spokesman-Review back in March (click on picture on the right to enlarge), Paul Guppy claimed that a 3.8% tax on all home sales was going to be implemented on January 1, 2013 as part of the new legislation.

This is not really true. As a matter of fact, it is barely based upon the truth, but it makes great fodder for email evangelists who trade gossip and half-truths in heavy volume around the world.

I recently received an email from “Lenny” who wondered if any of the following were true. The email claimed:

Here is a change we will get……….

Make plans to sell you house prior to January 1, 2013. King Obama is going rape your bank account before you realize it. Under the new health care bill— did you know that all real estate transactions are subject to a 3.8% Sales Tax?

You can thank Nancy, Harry, Barack and your local Democrat Congressman for this one. If you sell your $200,000 home, this will be a $7,600 tax. Read [article above] and scroll across to read it all.

The timing of this question is somewhat ironic, as we have been analyzing our falling real estate values fairly often of late. The reality is that this new law addresses “profits” and “gains”  far beyond what 99.9% of Americans are going to be receiving over the next ten years.

The fact is that most people who sell their home will not be impacted by this new law, it is NOT a new tax on every sale and only affects people who are “high earners,” meaning they make over $250K per year. But even if you are in that group, you would need to have seriously huge gain on the sale of your home before a part of it would be subject to this tax.

Remember, the first $500K of capital gains on a home sale is sheltered for married couples, so the 3.8% tax would apply to the gain above that amount. How many Tallahassee homeowners are in a position to profit more than $500K on the sale of their home? Considering less than 3% of the homes in Tallahassee could even sell for an amount above $500K, I really think we can consider this tax as the least of our worries in the housing market.

Around the country, home values are dropping. Worrying about a tax on a huge gain of your home sale would be a great worry for most homeowners. The article that was written was published in error and we can (hopefully) put this issue to rest.

If you do happen to receive an email on this issue, just point them to this article and tell them not to worry!

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Joe Manausa, MBA
Century 21 Manausa & Associates

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Topic:
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Anonymous #6
Anonymous
David Wansley

Who really gets screwed is me the guy who earned his education went to college 4 years got awards in school worked several jobs  and what not and finally buy a house and get no credit for it or the work in school that they are panning to give to kids now.  To wit Obama needs t o go run the UN where he belongs.

October 12, 2010 03:45 PM
Anonymous #7
Anonymous
Bernard Frank

Been trying to get back to the Panhandle for 4 years.  With the sorry market here in Jacksonville plus this new tax I may be stuck here for life

 

January 27, 2011 04:56 PM
Rainmaker
739,920
Joe Manausa
Tallahassee Real Estate
Century 21 Manausa and Associates

Bernard, if you really want to get back, talk to an agent and review your options. The market is going to be this way awhile, and if you are in a position to buy within the next 3 years, you will do very well.

January 28, 2011 02:31 AM
Anonymous #9
Anonymous
Ben Moffett

I haven't sold my house yet, but I've already got more (much more, like tens of thousands of dollars in hospital bills paid) than the anemic sales tax will amount to.  All of us will benefit from this in the long term. 

April 26, 2011 06:21 PM
Anonymous #10
Anonymous
Keith Collins
Sure it wont affect u on the sale of your primary but it will on the sale on an investment home and also on the rent u receive on the property monthly...so yes this affects real estate significantly
September 09, 2011 10:20 AM
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Joe Manausa

Tallahassee Real Estate
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