The 3.8% Tax

The National Association of Realtors has put together a publication entitled: "The 3.8% Tax Real Estate Scenarios and Examples".



Some of the highlights of the publication:
•This tax will go into effect on January 1, 2013
•The tax will not be imposed on all real estate transactions
•A 3.8% tax will be imposed on some, not all, income from interest dividents, rent (less capital loss) and capital gains (less capital losses)
•The tax will be on AGI over $200,000 for a single filer and $250,000 for a couple filing jointly.



The publication has various scenarios that show what the potential, if any, tax that might be paid on a real estate transaction.



There have been a lot of rumors on this new rule. The National Assocaition or Realtors publication does a great job of laying those rumors to rest.

The Payroll Tax and the Increase for Mortgage Fees

Another tax is going to be implemented on real estate starting January 1st.

In order to cover the two month "payroll tax holiday" fees will be increased on government backed mortgages from Fannie Mae and Freddie Mac.

The fee will be an additional 0.1 "surcharge" paid monthly on mortgages from both government backed institutions.

A typical $200,000 mortgage will see an approximate increase of $17 per month.

The Payroll Tax is used to fund Social Security. A two month "tax holiday" will take around $33 billion dollars away from the Social Security Trust Fund.

Bottom line: There is not free ride. Regardless of your political affiliation one thing stays the same: Somebody has to pay!

Obama Health Care Plan and Real Estate Tax

I just received an email from my Dad about a real estate tax that would be part of the Obama Health Care plan.

Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on unearned income of “high-income” taxpayers which could apply to proceeds from the sale of single family homes, townhouses, co-ops, condominiums, and even rental income, depending on your individual circumstances and any capital gains tax exclusions. Importantly, the “high income” thresholds are not indexed for inflation so will reach increasing numbers of middle-class taxpayers over time.

I have attached two links to the National Association of Realtors website. One link provides details on the tax with the other providing the position of the National Association of Realtors concerning this subject.


http://www.realtor.org/small_business_health_coverage.nsf/pages/health_ref_faq_med_tax?opendocument

http://www.realtor.org/small_business_health_coverage.nsf/Pages/health_ref_faq_advocacy?OpenDocument

This provision has been discussed since late 2010 but is worth revisiting. Please familiarize yourself with this tax provision.

Bottom line: Regardless of your political views if you want to have a federal program you have to find the money to pay for it!