Does the Obama Health Care Plan include a Real Estate Sales Tax?
Does the Obama Health Care Plan include a Real Estate Sales Tax?
There have been quite a few emails and social media posts in circulation on this topic. Although everyone is entitled to their opinion about the new heath care plan, the story that is being promoted about a new real estate sales tax on all home sales is misleading and inaccurate.
Here’s an excerpt from an email that is making the rounds:
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? When did this happen? It's in the health care bill. Just thought you should know. So, this is "change you can believe in"? Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes.
The actual note was longer, with the usual directive to SEND THIS EMAIL TO EVERYONE YOU KNOW at the end.
Here’s the truth. One of the provisions of the new health care legislation calls for high-income households to be subject to a new 3.8% Medicare tax on investment income starting in 2013. This has been frequently misreported as amounting to a 3.8% “sales tax” on all real estate transactions.
So who exactly would be subject to paying this tax? If you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the 3.8% tax on any net gain realized above and beyond this threshold.
This is not a new tax on every home sale, and only a very small percentage of home sellers and investors will be impacted by it. The tax is targeted at “high earners”. You are allowed a net profit of $250,000 as an individual or $500,000 as a couple when you sell your primary residence. The tax would only apply to any net profit realized beyond those amounts. With the average home sales price in the U.S. at about $170,000 right now, clearly the majority of home sellers will not be affected.
As always, if you have questions about real estate, give us a call!
Sources: The Spokesman-Review, Spokane Association of Realtors, Snopes.com, RealEstateabc.com
Darla and LeRoy Pilant are Real Estate Brokers in Spokane, WA. Connect with them at TheRealEstateAces.com or SpokaneHomesforHeroes.com