The New Real Estate Sales Tax.....
.....does not exist.
There is a tremendous amount of erroneous information being spread about, often by people who should know better, that there is a new Federal 3.8% Sales Tax on Real Estate that is in effect or about to go into effect to pay for the Affordable Care Act, often referred to as "Obamacare". We are constantly asked about it by clients and customers. Just yesterday a prominent local attorney who does a lot of real estate work asked me if I thought "the new real estate sales tax" would stop the housing rally. When I told him there is no such sales tax, he insisted there was. (insert lawyer joke here)
Here are the facts: Beginning Jan. 1, 2013 a new 3,8% tax on some investment income will take effect. This tax was passed by Congress in 2010 with the intent of generating an estimated $210 billion to help fund President Obama's health care and Medicaire overhaul plans. This tax will fall only on individuals with an adjusted gross income above $200,000 or $250,000 for a couple filing a joint return. This tax will apply only to that individual or couples portion of their investment income that is above $500,000. So, in a simplified scenario, an individual with an adjusted gross income above $200,000 and with capital gains on investment income of $525,000. would pay this tax on $25,000.
Now, it is possible that investment income could be generated by the sale of real estate. But it's a far jump from that scenario to a "real estate sales tax".
If you would like to know more, just ask and we'll be glad to email you a 10 page pdf document from the National Association of Realtors explaining this tax. We are not tax professionals and unlike our attorney friend we do not pretend to be so if this information is important to you we suggest you call your accountant. After all, you shouldn't believe everything you read on the internet!