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the new federal health care law does NOT include a 3.8 percent transfer tax on home sales

Contrary to some widely circulated e-mail messages, the new federal health care law does NOT include a 3.8 percent transfer tax on home sales, according to Snopes.com, FactCheck.org and the National Association of Realtors.

The new law created a 3.8 percent Medicare tax, which applies to net investment income earned by taxpayers who have an adjusted gross income of more than $200,000 for individuals or $250,000 for married couples. That tax becomes effective Jan. 1, 2013.

Net investment income includes capital gains from the sale of a home, so a home sale could push a taxpayer's income into the bracket in which the new tax would apply. However, the existing capital gains tax exclusion of $250,000 for individuals and $500,000 for married couples on the sale of a principal residence is still in effect, and that will protect nearly all homeowners from the new tax.

"The truth is that only a tiny percentage of home sellers will pay the tax," FactCheck.org reports.

More information:
Snopes: Real Estate Tax
FactCheck.org: A 3.8 Percent 'Sales Tax' on Your Home?
NAR: Myth Busters (PDF)
NAR: The 3.8% Tax: Real Estate Scenarios and Examples

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David Hoshaw
Broker, CRS, GRI, e-PRO
Weichert, Realtors - Hoshaw & Associates
28009 Smyth Drive  Santa Clarita, CA 91355
 
661-287-4466 ext. 226
661-312-1579 mobile
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