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leftstreet

(41,023 posts)
2. Does he mean the income tax?
Wed Oct 9, 2013, 09:48 PM
Oct 2013
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/

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