3.8% Medicare Tax - Do you know how this affects real estate?

By
Real Estate Agent with Joy Daniels Real Estate Group, Ltd.

We have often shared "spam" messages that we receive.  I recently received this one but it wasn't a typical "spam" type, but definitely one that seemed misguided.  Because I personally had never heard of a real estate sales tax, I thought rather than ignore this email, I would check with my (stellar) accountant.   This is a lesson in RESEARCHING the facts and NOT believing everything you see on TV or receive via mail or email. 

HERE IS THE "MISGUIDED EMAIL":  

 

The National Association of Realtors is all over this and working to get it repealed, -- before it takes effect. But, I am very pleased we aren't the only ones who know about this ploy to steal billions from unsuspecting homeowners. How many realtors do you think will vote Democratic in 2012?

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, etc. When did this happen? It's in the health care bill, -- and it goes into effect in 2013. Why 2013? Could it be so that it doesn't come to light until after the 2012 elections? So, this is â change you can believe in?

Under the new health care bill all real estate transactions will be subject to a 3.8% sales tax.

If you sell a $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation, -- who often downsize their homes. Does this make your November, 2012 vote more important?
 
 

HERE IS MY ACCOUNTANT'S RESPONSE: 

 

This is about the 3.8% Medicare Tax that is in the Healthcare Act.  It is intended to be a tax for people with incomes over $250,000.It does go into effect next year.   The tax is based on unearned income (interest, dividends and capital gains mostly) that are taxed.   Our understanding of the tax is that if the taxpayer would normally pay tax on this unearned income and they are over $250,000 in total income, then the tax would kick in.  Typically the sale of a principal residence isn’t taxed so the “new” tax wouldn’t apply.  It could however apply to someone who is holding the property for investment purposes.   If that is the case the gain would be taxable, not the sales price.  

 

If you are in the Central Pennsylvania area and are looking for a reliable, wise, kind and dependable accountant.  I would strongly suggest:

 

Stephen P. Gift, CPA, CFP®, PFS
Managing Member
Gift and Associates, LLC
1205 Manor Drive, Suite 100
Mechanicsburg, PA 17055-4894
717.766.3555
888.999.6936 toll free
717.766.4005 fax

 

Posted by

Joy

Joy Daniels, GRI, ABR, CSP, e-PRO
JOY DANIELS REAL ESTATE GROUP, LTD
2793 Old Post Road, Suite 200
Harrisburg, PA  17110

(717) 695-3177  office - Call TODAY and let me help you find your dream home!

www.joydaniels.com

Joy@JoyDaniels.com - Email TODAY and let me help you find your dream home!

What is your home worth?  Find out at MLS Market Snapshot

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  1. Erica Ramus 09/17/2012 09:17 AM
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Ambassador
742,535
Suzanne McLaughlin
Wright & Sherburne Counties Realtor
Sabinske & Associates, Inc. (Albertville, St. Michael)

Unbelievable the lengths that some people will go to to scare the public.  Thanks for the information, Joy.

September 17, 2012 02:20 PM
Ambassador
1,028,117
Dick Greenberg
Northern Colorado Residential Real Estate
New Paradigm Partners LLC

Hi Joy - Thanks for the clarification. I too have been asked about this a couple of times - well, actually not asked, but told about it, and now I have the answer.

September 17, 2012 03:26 PM
Rainmaker
562,036
Joy Daniels
Joy Daniels Real Estate Group, Ltd.
My point was not to make a statement about taxes, politics or anything...I just wanted state that when we get things that need clarification we should professional advice. Thanks Suzanne and Dick...I do hope the explanation helps.
September 17, 2012 05:59 PM
Rainmaker
1,055,424
Wallace S. Gibson, CPM
LandlordWhisperer
Gibson Management Group, Ltd.

We have seen this with the lead certification guidelines by the EPA; the 1099 reporting requirement under Obamacare (not the long standing 1099 reporting required by the IRS) and now the 3.8% tax over the capital gains threshold.....more real estate professionals need to learn about capital gains

September 18, 2012 03:45 AM
Rainer
11,777
Kevin Crawford
Crawford Luxury/KW Luxury International

This tax is a disgusting overreach by the government. There are actually a lot of folks that this will affect. Certainly not the majority, but does that make it excusable? Is doing wrong to one person not doing wrong? Even if you're not concerned about those that this will affect, what you need to be concerned about (other than the fact you were lied to when you heard Obamacare wouldn't create one new tax) is that if they can do it to the wealthy, they can do it to you. And they've never given us reason to trust that if given the opportunity to tax more, they won't. 

 

We can give the government 100% of our income. But it won't fix things. Money never HAS fixed things with them. If more money fixed things, the TRILLIONS of dollars poured into social programs every year would have created positive outcome. Instead they say "well, we need more to make it REALLY work". 

 

They've not run anything efficiently, ever. For the public to be OK with them taking more and more money, because it doesn't affect them personally, is ignorant, because it WILL affect them in some fashion. If they do it to one group of people, they'll do it to you too. 

September 18, 2012 10:01 AM
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