In the past week I have received multiple inquiries about the new 3.8% tax on real estate transactions that was buried in President Obama's healthcare reform bill to help pay for Medicare funding. Due to the recent influx of interest on this topic, I felt it would be best to share the National Association of Realtors explanation of how this tax will affect homeowners and the sale of real estate.
Many Americans have received emails stating that beginning in 2013 they will have to pay a 3.8% tax to sell their home. This is not entirely true. The tax targets higher income earners (couples filing joint return over $250k AGI and individuals over $200k AGI) and some investment income generated from interest, rents, capital gains, and dividends. Rather than recreating the wheel, I will instead refer to the brochure produced by the National Association of Realtors (NAR) who have put out a very clear explanation with scenario examples of how this new tax will affect all of us beginning in 2013. NAR makes it very clear that "This new tax was never formally introduced, discussed or reviewed until just hours before the final debate on the massive health care legislation began. NAR expressed its strongest possible objections but the legislation passed largely on a largely party line vote."
In quick summary of this topic: Yes, there is a new 3.8% tax imposed on some real estate transactions beginning Jannuary 1, 2013 and it is to assist in funding Medicare under President Obama's healthcare reform bill. No, this new tax WILL NOT affect every real estate transaction.
I'd love to hear your feedback on this tax.