| IS IT TRUE? WILL THE RESIDENTIAL REAL | | | | estate activities of the last several years, so income |
| ESTATE BE TAXED 3.8% AS PART OF HEALTH | | | | thresholds aren't an issue either. |
| CARE REFORM BILL? | | | | My friend made it sound like it was a straight dollar |
| Recently, a friend of mine mentioned that the new | | | | for dollar 3.8% sales tax, which would have been the |
| health care reform bill was going to include a 3.8% | | | | single stupidest thing Washington could have done |
| sales tax on the sale of homes. I think | | | | since the beginning of the republic. I am never glad to |
| I blurted out, "you've got to be kidding me!" Of | | | | hear Washington is tinkering with the market in which |
| course, I had to come home and research the details. | | | | I earn my living, but I am glad to know that this |
| Before I got to doing the research, I had all kinds | | | | 3.8% sales tax only applies to profits over 500k for |
| of expletives circled around in my head. Thankfully, | | | | joint filers. The 500K profit threshold pretty much |
| they stayed inside there. Other thoughts included; | | | | eliminates most home sales unless the homes are |
| could our leaders in Washington really be that stupid? | | | | selling for millions of dollars, which is a very small |
| Hasn't the housing industry already gone through | | | | percentage of homes. |
| enough trauma? Why would Washington want to kill | | | | I think the potential bigger issue may be commercial |
| the real estate business and therefore the economy? | | | | properties owners where buildings that cost millions |
| My research did verify the new health care reform bill | | | | of dollars could easily appreciate a small percentage |
| does in fact have a provision to charge 3.8% sales | | | | but increase in value $250K or $500K in net |
| tax on the sale of homes, but there is much more to | | | | terms. The year you report the sale, your income |
| it than that though. The 3.8% real estate sales tax | | | | would be increased by the net profit from the sale |
| only applies to single tax payers making more than | | | | of the building. For example, a retired couple on a |
| $200,000 or joint taxer payers making more than | | | | fixed income could sell a commercial property from a |
| $250,000 AND you wouldn't pay on the first $250,00 | | | | business they once owned. Even though the couple is |
| in profits for a single tax payer or $500,000 in profits | | | | on a relatively small fixed income, the sale of the |
| for a joint tax payer. | | | | building would trigger them into the 250K income |
| Whew...I was worried there for a minute. All the | | | | class when the profit of the sale exceeds 750K. |
| residential real estate I own has dropped 40-50% in | | | | Again, this might not happen that often, but one |
| value so no need to worry about profits. For many | | | | thing we know for sure...Washington put the provision |
| us real estate types, it will be many years (if ever) | | | | in to raise revenues and that it will. |
| before we work off carry forward losses from real | | | | |