3.8% Real Estate Tax Coming in 2013. How will it affect you ?
Now that the Supreme Court has upheld the Affordable Care Act, all of its major provisions remain in effect, including the new 3.8% tax on interest, dividend, rents and capital gains income.
Many people have asked if this is a tax on real estate. The answer will be different for each person and each transaction. This tax will not be imposed on ALL real estate transactions.
Rather, when the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses), which may be generated from real estate transactions. The tax will fall only 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 gain above those thresholds is included in AGI and could be subject to the tax.
A CPA or attorney must apply a formula to determine what portion, if any, of these types of investment income would be subject to the tax.