can someone explain to me, is there a 2-3% tax on the sale of the house to fund the ACA. UPDATE

[seabeyond]

i googled and saw some comments but nothing straight forward. explanation would be appreciated if there is any such thing. and i really wouldnt be opposed. it was brought up by husbands father, who heard from a neighbor..

edit... thank you so much everyone. i was getting piece on google. you all made it so much simpler for me. i knew i would have heard about it on du, if it was straight up what he was saying. i appreciate the answer. thanks.

[The Velveteen Ocelot]

1. It's false. Snopes explains:

http://www.snopes.com/politics/taxes/realestate.asp

The 3.8% Medicare tax has been frequently misreported as amounting to a 3.8% "sales tax" on all real estate transactions. This is incorrect: the Medicare tax is not a sales tax, nor does it apply to all real estate transactions; it is a tax on investment income (income which may or not derive from the sale of property) only for persons who earn more than the amounts specified in the bill.

First of all, the Medicare tax will be imposed only on individuals with an income above $200,000 and couples with a joint income more than $250,000, a figure which currently excludes about 97% of all U.S. households. Second, the tax will not be assessed on every house sale, but only on real estate transactions that produce profits over a specified dollar amount.

[seabeyond]

5. thank you. i told hubby i had not seen it on du. and if it was real, surely i would have.

appreciate

[leftstreet]

2. Does he mean the income tax?

3.8% Sales Tax on Home Sales Beginning 2013?
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The tax is real but seriously overstated. Among other things, as discussed below, the tax is an income tax, not a sales tax.

Beginning in 2013, the “Affordable Care” act imposes a new 3.8% tax on investment income of taxpayers whose total income exceeds $200,000 ($250,000 if filing a joint return). The tax is imposed on the excess of the taxpayer’s income over $250,000 or the taxpayer’s total net investment income, whichever is less. For this purpose, net investment income means interest, dividends, annuities, royalties and rents, and capital gains, reduced by capital losses and other deductions specifically allocable to the investment income. Net investment income for this purpose does not include income that is generated in the ordinary course of a trade or business, nor does it include amounts received from a qualified retirement plan or IRA.

All or part of the gain (not the entire proceeds) on the sale of a home would be subject to the 3.8% tax if the taxpayer’s total income (including the gain on the home sale) exceeds $200,000 (or $250,000 if a joint return is filed). However, if the taxpayer meets the other requirements for exclusion (essentially has owned the residence and used it as the taxpayer’s principal residence for 24 months during the 60 month period immediately prior to closing the sale), the gain on sale is reduced by $250,000 (or $500,000 if the taxpayer files a joint return). The exclusion applies in determining the amount of net investment income for purposes of the 3.8% tax.

http://www.t-mlaw.com/articles/3-8-sales-tax-on-home-sales-beginning-2013/

[seabeyond]

8. thank you. i knew it was wrong. nt

[Warren Stupidity]

3. 3.8% of profit over 500000 for primary residence married couple with income over

250000.

It is a tax on the 1%. A good tax.

[seabeyond]

9. thank you,.... i love du. nt

[Curmudgeoness]

15. Keep in mind the word "profit".

Not the sale price.....profit on the sale of a home. That is PROFIT of a half million dollars.

I don't know anyone who would ever fit into that classification.

[Warren Stupidity]

17. Plenty of people will realize the profit.

If for example you bought your primary residence and lived in it for 30 years and you live in the high value coastal metro regions, you could easily realize 500000 in profit, but if you are not earning over 250,000/yr, like for example you are retired, no problem and no additional tax.

[Curmudgeoness]

19. Good point that this will not affect everyone

who realizes a profit, since they have to earn over $250,000 a year as well as have profit over $500,000. But I still think that few people will have that much profit. My sister who lived in the Anaheim area for years sold her house and made what I considered a huge profit, but it wasn't that high....and their house was a nice house in a great neighborhood. That is a lot of profit.

[Tx4obama]

4. A couple of links below

Snopes: http://www.snopes.com/politics/taxes/realestate.asp

There Is No Obamacare Tax On Most Home Sales. Really.
http://www.forbes.com/sites/beltway/2012/04/02/there-is-no-obamacare-tax-on-most-home-sales-really/

Demystifying the ‘Obamacare’ real estate tax
http://www.inman.com/2013/02/14/demystifying-obamacare-real-estate-tax/

[seabeyond]

10. thanks tx. du is the best. i am using these links to inform. nt

[tkmorris]

6. This link explains it pretty well

Especially the bit starting with paragraph 3.

http://www.t-mlaw.com/articles/3-8-sales-tax-on-home-sales-beginning-2013/

What it comes down to is that unless you sell your home for a profit of $250,000 or more (sale price minus what you originally paid for it) the tax doesn't apply, and if you lived in it for any substantial time prior to it's sale that profit amount rises to $500,000 before the tax is applied. Even then, the tax only applies to the amount in excess of the limits above.

In short this will not matter to hardly anyone but the reasonably wealthy.

[seabeyond]

12. i appreciate it. you all explained it so simply. thanks. nt

[rgbecker]

7. Snopes: Possible, if you make a lotta bucks.

http://www.snopes.com/politics/taxes/realestate.asp

[seabeyond]

13. thanks rg. nt

[ErikJ]

11. The ReichWing Propaganda ministers are working overtime.

Grabbibng ANYTHING they can without full explanation to trick the gullible.

[seabeyond]

14. yes, they are. geeesh. nt

[Journeyman]

16. A house or The House (of Representatives)? . . .

A closed escrow on The House would certainly explain the latest batch of crazery.

[Loudly]

18. According to Forbes:

(If you are coming to DU for tax advice, then this almost certainly doesn't apply to you.)

There are two taxes for individuals who make adjusted gross income over $200,000 and couples who make over $250,000. So these taxes hit only the top earning 2% to 3% of filers.

One tax is a 3.8% tax on “unearned” income over the $200,000/$250,000 threshold. This is income on interest, dividends, capital gains, net rents, royalties, and annuities. Remember, the extra tax is only on the amount above the $200,000/$250,000 threshold.

The other tax is an additional 0.9% Medicare tax on “earned” income over the $200,000/$250,000 threshold.