Now that the holidays are upon us, and the New Year is around the corner, I would like to take a moment to shed some light on the upcoming 3.8% tax that we have been hearing about.
The tax is set to go into place
starting January 1, 2013.
First, I would like to start off
by telling you what the tax is not.
- It is not a sales tax on home sales
- It does not increase the transfer tax
- It will not affect any deductions already in place when the gains are less than $250,000 for an individual or $500,000 for a married couple
- Lastly, the mortgage interest deduction will not be eliminated
The 3.8% is a tax on “Unearned” income, which includes
investments, rental income and home sales.
So if you are asking if the tax
will affect the sale of your home, the answer is no.
If you are in a tax bracket of an
annual income of $250,000 or more, the capital gain on the sale of your house
has to EXCEED the $250,000-$500,000 capital gain exclusion.
This is a very simplified
explanation of how the tax works. I am not a financial advisor (nor do I play
one on TV.) I strongly recommend that you speak with your accountant/advisor for
a more detailed clarification.
Happy Holidays.
Frank
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