I have been asked about a possible 3.8 percent tax that will be put on home sales beginning in 2013 as part of Obamacare. I want to do my best to clarify this. I am not an accountant, and I share this information just as a simple answer to the misconception.
I have heard people say that they are not selling because they heard there is the tax on the sale over and above any other normal taxes and fees. I try to explain, but am not always believed.
Then there are buyers who think that the 3.8 percent applies to them, which makes them hesitant as well.
So I am here today to clear up any misconceptions about the 3.8 percent tax.
It is there, BUT it is not as simple as on every sale of every home. It is actually based on the net gain in the home as it applies to taxable income, if it is an individual or a couple, and many other factors.
Below is a brief synopsis of the applicable code and what it really means….
When it comes to IRS regulations, you need to check with your accountant for the most accurate and up-to-date information.
FactCheck.org explains it like this:
“The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.
The Internal Revenue Service says that to qualify for the $250,000/$500,000 exclusion, a seller must have owned the home and lived there as the seller’s "main home" for at least two years out of the five years prior to the sale.”
In short, this “tax” will only apply to certain sellers, NOT to everyone as was it was originally being told. The “claim” that this tax would amount to a $15,200 tax on the sale of a typical $400,000 home is untrue.
There are specific levels of profit and income that must be met for this surcharge to be applicable.
I offer this just as a brief explanation. Remember, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.
But when it comes to your local real estate needs — you can contact ME!
Donna Galinsky
Pugatch Realty Corp
FindYourHomeLI.com
dgalinsky@pugatch.com
516-317-9253
