Skip to comments.Property Owners Face a New Surtax [ObamaCare tax]
Posted on 10/02/2012 11:30:20 AM PDT by ConjunctionJunction
The housing market may indeed be recovering, as many experts suggest, but investors are still struggling to understand what, if any, taxes they'll owe upon selling their homes.
At issue is how the new "Medicare tax" will apply to real-estate transactions.
Passed in 2010 to help fund the health-care overhaul, this 3.8% surtax kicks in next year on many forms of investment incomeincluding some interest, dividends, rents and capital gains.
While its effect on home sales won't be as far-reaching as many fear, the Medicare tax could pack a punch for certain investors. It is not a sales tax. And it won't apply to home-sale gains excluded from income under current law. But it could affect investors with outsize gains or gains from the sale of a vacation home or investment property.
Determining whether you will be subject to the tax is no easy matter.
"The confusion lies in the fact that it's not a yes or a no," says Melissa Labant, director of tax for the American Institute of Certified Public Accountants. "It's a sometimes or a maybe."
"We're waiting for guidance from the IRS on a lot of specific issues," she adds. "We don't have all of the answers yet."
Here's what we do know:
The new tax will hit individuals with more than $200,000 in adjusted gross income, and married couples with adjusted gross income above $250,000 ($125,000 for married taxpayers filing separately). These thresholds are not indexed for inflation, so more people may be affected over time.
Specifically, the tax will apply to either your net investment income or the amount that your adjusted gross income exceeds the thresholdwhichever is less.
(Excerpt) Read more at online.wsj.com ...
This assumes that anyone has outsized gaines in this market.
That's what they said about the Alternative Minimum Tax.
Plus, with QE-infinity, hyper-inflation is only a bank-panic away.
A lot of people have investment property, vacation homes and bank accounts that generate interest. The impact of this tax is huge. You’ll see.
The people who passed this abomination know exactly what it will do. The current confusion is deliberate, so the true effects will be kept out of the news.
If the imposter-in-chief is reelected, they tell the public the awful news. If he loses, they blame it on Romney.
Just the repeal the f’in law!
Actually, your assumption, that no one has property that has appreciated in value, is incorrect.
Bank accounts generate interest? News to me. And there can’t be very many people with outsized unrealized gains, not after four years of Obama.
There are millions of people who are going to be affected by this law. Many older people bought their homes years ago when property was much less expensive than it is now. In some areas of the country median house prices are still over a million. And yes, bank accounts do generate interest. It’s very low. With this new law even the paltry sum from a CD or bank account will get this tax surcharge.
“In some areas of the country median house prices are still over a million”
Where? Most of those areas that I can think of are populated by liberals, bureaucrats, or beltway bandits. They are about to be hoist by their own petard.
that said, calculating the amount subject to this tax is going to be a nightmare.