As a last minute addition to the "Obamacare" law passed in 2010, a 3.8% tax on investment income was created to help fund Medicare. On January 1, 2013 this tax will take effect. Proceeds from the sale of real estate can be subject to this new tax. While this tax will not apply to all real estate transactions, it will apply to some.
Part of being an informed seller is knowing the tax consequences of selling. Might it be a better idea for you to sell before the tax takes effect? Something certainly to think about. Click here to read a very informative brochure from the National Association of Realtors which explains the new tax in a very straightforward fashion. One thing to keep in mind is if you sell your principal residence, you will still receive the full benefit of the $250,000 (single tax return)/$500,000 (married filing joint tax return) exclusion on the sale of that home. If your capital gain is greater than these amounts, then you will include any gain above these amounts as income on your Form 1040 tax return. If this is the case, you may be subject to this tax. Like with any other part of the tax code, there's just no simple answer.
If you are thinking of selling your house (this year or next), it's never a bad idea to consult your accountant about the tax consequences of your sale. I will not go into depth explaining the new tax, because I'm not an accountant nor am I tax attorney. Please do not construe this article as tax advice.
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