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| Home Front: Politix |
| New Tax on Property Owners |
| 2012-10-02 |
| Posted twice --- chose the one that was posted first by time submitted The housing market may indeed be recovering, as many experts suggest, but investors are still struggling to understand what, if any, taxes they'll owe upon selling their homes. At issue is how the new "Medicare tax" will apply to real-estate transactions. Passed in 2010 to help fund the health-care overhaul, this 3.8% surtax kicks in next year on many forms of investment income--including some interest, dividends, rents and capital gains. While its effect on home sales won't be as far-reaching as many fear, the Medicare tax could pack a punch for certain investors. It is not a sales tax. And it won't apply to home-sale gains excluded from income under current law. But it could affect investors with outsize gains or gains from the sale of a vacation home or investment property. Determining whether you will be subject to the tax is no easy matter. "The confusion lies in the fact that it's not a yes or a no," says Melissa Labant, director of tax for the American Institute of Certified Public Accountants. "It's a sometimes or a maybe." "We're waiting for guidance from the IRS on a lot of specific issues," she adds. "We don't have all of the answers yet." Here's what we do know: The new tax will hit individuals with more than $200,000 in adjusted gross income, and married couples with adjusted gross income above $250,000 ($125,000 for married taxpayers filing separately). These thresholds are not indexed for inflation, so more people may be affected over time. Specifically, the tax will apply to either your net investment income or the amount that your adjusted gross income exceeds the threshold--whichever is less. There is lots more. How did we miss this? We had to pass the bill to read it. Now, we're reading it... |
| Posted by:Deacon Blues |
| #6 FYI -- the real estate market is NOT recovering. The upshot is that foreclosures have been delayed due to the upcoming election. Without these distressed properties being sold the housing numbers showed an artificial increase (if you take numbers off the bottom your average goes up). There is now a backlog of foreclosures which will hit the market next year and, if anything, further depress prices. |
| Posted by: Iblis 2012-10-02 14:10 |
| #5 Sounds more like another tax on earnings to me... |
| Posted by: Bright Pebbles 2012-10-02 13:54 |
| #4 I had a client ask about this yesterday; I couldn't give him a straight answer because I saw a lot of different interpretations of the law, and (as the article mentions) the IRS hasn't provided guidance on this yet, which isn't a surprise because of all the tax law changes getting thrown at them by Congress. |
| Posted by: Raj 2012-10-02 13:28 |
| #3 These thresholds are not indexed for inflation... Ah, another aspect of the Bernanke Plan(c), comes to light. /sarc off |
| Posted by: Procopius2k 2012-10-02 13:26 |
| #2 How did we miss this? Because THEY told us THEY had to pass it before WE could find out what was in it. |
| Posted by: Ptah 2012-10-02 13:18 |
| #1 How did we miss it? -- It took that long for someone to drill down through the legal mess that is the ObamaNation-care law. There are, I'm sure, even more unpleasant surprises to come. |
| Posted by: Anguper Hupomosing9418 2012-10-02 13:18 |