There is not a new Real Estate Sales tax
At SBS CPA Group, we have received a few calls from concerned clients regarding emails indicating there is a new 3.8% federal sales tax on the sale of your home. This is untrue. However, the new “Obamacare” bill did institute a new 3.8% medicare tax on passive income for married taxpayers earning more than $250,000 beginning in 2013.
Passive income is: capital gains, dividends, interest, most rental income, etc. Passive income is not income received from a pass through business entity that you performa significant amount of work for.
Gains of $250,000 for a single tax payer or $500,000 for a married taxpayer on the sale of a principle residence are exempt from income as long as you have lived there for two years and it is your principle residence. The gain on the sale of your property is calculated as the selling price less the cost you bought it for less any money you spent to improve the property.
Therefore, I cannot imagine the new Medicare tax being charged for the
gain on the sale of your principle residence in Fort Wayne, Indiana as our
housing market generally does not produce large enough gains.
If you have a rental property, a second home, or any other property including stocks or mutual funds that you intend to sell for a big gain and the total income on your tax return will be over $250,000 make sure you call your CPA at 260-338-0833 to discuss what this could do to your tax situation.
Karena Sylvester, CPA