Beginning January 1, 2013, a 3.8 percent tax on some investment income will take effect. The tax was passed by Congress in 2010 to assist the funding of President Obama’s health care and Medicare plans. Unless it is repealed prior to that date it will possibly have an impact on the sale of your home. Therefore it is important to consider its consequences if you are planning to sale your personal residence or investments on or after January 1, 2013.
Because this is a complicated tax, it will be hard to predict how it will affect everyone who sells their property. Below is a brief summary which I hope will give you some insight on how it works.
The 3.8% tax may be imposed on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will only be applicable on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI. The tax for those qualifying is applied to the lessor of investment income (including capital gains from the sale of your primary residence) or excess AGI over the 200,000 or 250,000 amount.
To see more information about this tax see the downloadable brochure available from THE NATIONAL ASSOCIATION OF REALTORS®