Once again, I am beginning to see confusion related to the 3.8% real estate tax enacted with the Health Care Reform Act in 2010.   This is a complex tax with many misconceptions. Below is a general summary of key points of the tax:

  • It is important to note that this tax will not be imposed on all sales, there are conditions that must be met.
  • This is NOT a transfer tax.
  • When the legislation becomes effective, it may impose a 3.8% tax on some income from interest, dividends, rents, and capital gains.
  • As is, the tax will fall on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.
  • The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a profit above $250,000 / $500.000 on a principal residence may be subject to the tax.
  • The National Association of Realtors has prepared a Worksheet to help you better understand the implications of this tax.

Additional information can be found courtesy of the National Association of Realtors at: The 3.8% Tax & Health Care - or - The NAR's www.houselogic.com

* Again this is a complex tax AND many other tax related factors may affect your situation!  Please consult your CPA or Tax Professional for how this may affect you & your family!