Tax On Home Sales
Under 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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Thanks so much for this clarification, however, the issue is that once the law is in place, they can modify it in the future. Once the camel gets his nose in the door it wont be long till the rest is in. Also known as the " thin entering wedge." Again thanks very much...NM
"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."
Hey, what if you are not married!? After what level of captial gains are single people taxed? Why should only married people be considered?
Hey Eric, it's $250K per person in the marriage .... no volume discount :). Singles are $250K.
What about investment real estate? Say you sell a duplex that you don't live in? Does the tax apply? Will a 1031 exchange exempt you from this tax?
Why stick a tax on homes in a health care bill??????
Answer: So Obama can destroy the U.S. He is a sleeper that someone poked and woke up and made president an now controls.
Taxes appear in other bills since they pay for certain goverment programs--i.e. the new health care plan. Capital gain taxes apply to sales of houses that are NOT principal residences and remember the special provisions for those will "sunset" soon. To qualify for a 1031 Exchanges, the exhange would have to meet serveral guidelines so be careful when arranging one of these.
Obamacare much be repeal this is BULLSHIT There is so much hide Taxes on the American People
that we mit just as well just hand our pay checks over to obama now that is what he is wanting !!!
This tax placed into the Affordable Health Care Act is annother hit on the middle class in our country. The numbers discussed are not that high, realistically speaking. And, to be honest, the super rich arent that badly effected just like with inflation. This provision is another way to rob the middle class of what we have earned over time, just like the laws attack on Defined Benefit plans. With the deficit at 16 trillion we can not afford this plan. President Obama told David Letterman the deficit is a danager long term. Combined with the current debt, this health care plan with over 25 billion spent for oversight and regulation for the most part (this is the first couple of hundred pages) our President is telling us we have a problem.
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