Original article available at http://speakingofrealestate.blogs.realtor.org
Tax time is nearing and once more rumors are circulating on the Internet and by e-mail that the health care reform law enacted two years ago includes a 3.8 percent transfer tax on real estate starting in 2013. That rumor is not true and NAR has material available to explain how that 3.8 percent tax works.
It’s a tax on a very narrow band of investment income for high-wealth households (those who earn $250,000 in a joint return or $200,000 as an individual) that could come into play on the sale of a house if the sales gain is more than $500,000 for a married couple or $250,000 for an individual.
Even in the unlikely event the sales gain is more than that amount, the tax would only apply based on other considerations having to with the household’s income and its tax situation.
The bottom line is, the tax, which was imposed to help shore up Medicare, will only hit some portion of investment income.
This overview video explains further.