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From the National Association of Realtors:
No 4.0% "Sales
Tax" on Home Sales In Recently Enacted Health Reform Bill
Contrary to reports and newspaper articles circulating widely on the
Internet, there is not a 4.0% "sales tax" or "transfer tax" on the
sale of a home included in the recently signed health care reform
bill. The analysis underlying these reports is incorrect and fails
to take into account the interplay of the bill's provisions with
already existing real estate tax laws that remain unchanged.
What was included in the health bill is a provision that imposes a
new 3.8% Medicare tax for some high income households that have "net
investment income." Any revenue collected by the tax is dedicated to
the Medicare hospital insurance program. This new tax will only
apply to households with Adjusted Gross Income (AGI) of more than
$200,000 for individuals or more than $250,000 for married couples.
Since capital gains are included in the definition of net investment
income, an additional tax obligation might result from the sale of
real property.
In the case of the sale of a principal residence, the existing
$250,000/$500,000 exclusion from capital gains on the sale of a
principal residence remains unchanged. Consequently, even when the
AGI limits are met, the new tax would not be applied to all capital
gains that result from the sale of a home. Rather, it would only
apply to any home sale gain realized in excess of the $250K/$500K
existing primary home exclusion that pushes the filer's AGI over the
$200K/$250K adjusted gross income limit.
The new Medicare tax will not take effect until January 1, 2013.
Marcia
Salkin 202-383-1092,
Ken Wingert
202-383-1196,
Scott Rinn
202-383-7508
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