Is There Really a 3.8 Percent Home Sales Tax in 2013?

US Federal Tax FormsThis question continues to arrive in my email box with a number of clients concerned that the new healthcare legislation imposes a 3.8 percent transfer tax on all homes sold after 2013.

According to the National Association of REALTORS® (NAR),

The 3.8% tax is imposed ONLY on  those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return).  The tax applies to investment income, defined as interest, dividends, capital gains and net rents.  These items are all included in an individual’s AGI.  A formula will determine what portion, if any, of these types of investment income would be subject to the tax.

NAR also states that this is not a transfer tax on real estate sales and that 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.

So while there is a new tax in the healthcare law, it is not a transfer tax and will not apply to all sellers of real estate. Sellers are encouraged to discuss their particular circumstances with a CPA or their tax preparer prior to listing their homes for sale.  

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About Tom Branch

Tom Branch has written 597 posts in this blog.

Have you ever just met someone, but felt you like you'd known him for years? That's what most people experience with Tom. He has a knack for making folks feel right at home. After 21 years in the Air Force, loyalty and honesty are the foundation of everything Tom does. In addition to being a Texas Real Estate Broker, Tom is a Certified Distressed Property Expert (CDPE) and a Short Sales & Foreclosure Resource (SFR).