Yes, you read that correctly. Among a host of other grenades buried in the 2,300 page health care reform bill was a section enabling a federal tax on some real estate transactions. Why is this the first time you are hearing about this? Believe it or not, most members of Congress voting on the Bill did not know what, exactly, was included in the 2,300 page monstrosity. Some may recall Nancy Pelosi’s famous line, “We have to pass the Bill, so that you can see what’s in it.” Well, she was right. It can be a bit confusing at first, but here is who’s in danger of owing another 3.8%:
Who is going to owe?
If you meet both of the requirements below, you may be liable for the additional 3.8% Federal Tax:
(1) The sale of your property results in a gain of $500,000 or greater.
(2) Your income is $200,000, or more, for a single seller or $250,000, or more, for a married couple
This tax is on top of the capital gains tax you will already be paying. A $500,000 or more gain in San Carlos will affect more than a handful of San Carlos families. Many families that bought in the mid to early 90s in San Carlos have most likely already made a minimum $500,000 gain. If those same families meet the income requirements, they will be coughing up another 3.8% through escrow starting in 2013.
6 Comments
So people that make a half million on market appreciation (money invested into the house in upgrades/remodel would be excluded) have to pay a one-time tax. Kinda like the high property taxes the rest of us have been paying all these years that they have not had to pay thanks to their low valuation? Am I missing something? Champagne problem…
JB
Let me ask you a few questions:
If you owned the same home for 24 years like I have, would you still whine about Prop. 13? Somehow I doubt it. Many folks’ principles seem to change around the issue of money.
If a 70 year old person who has owned their home in San Carlos for 40 years and never made more than $75,000 a year during their entire working career whined about 30 somethings making $2M in stock options, would you be sympathetic? Or would you tell the 70 year old to “get over it”?
Honestly, what would you say?
Bob
I have, on a regular basis, stated my strong concern about continually increasing government spending, on-going waste and corruption on a massive scale, ever-increasing national and state debt and the never ending need for higher and higher taxes to fill the insatiable financial demands of government and the people who work for the government. This new tax is just another instance of this. Hopefully, more and more people will become aware of the scam being implemented on the American people.
No one and certainly not Nancy Pelosi really knows what the ultimate impact of our new health care law will be. My health insruance premiums continue to go up? What about yours? What I do know is it will cost Americans Billions and Billions of dollars with uncertain benefits at best. But see Nancy will be long gone by the time our kids and grandkids play the bill.
Arn-
You challenge JB on how his personal experiences influence his principles, yet you dismiss broader health care coverage (including coverage of pre-existing conditions) as “uncertain benefits at best.” To paraphrase you, if you had a pre-existing condition without medical insurance, would you be in favor of health care reform, or would you suggest it has uncertain benefits?
The other thing I find troublesome with your post is the typical hypocricy around the debt issue. Increasing national and state debt is a huge problem, but apparently only on the cost side. If you and others were so concerned about the deficit, then surely a repeal of the Bush tax cuts for the wealthiest Americans would be a welcome action, as it would reduce the deficit by over $800 B in the next decade. But much like this real estate tax, I suspect that is not acceptable to you — the only acceptable way to cut the deficit is apparently to dismantle entitlement programs like Social Security and Medicaid that improve the lives of millions of Americans, no matter what the social (and financial) consequences on this nation.
We’ve become sheep who believe the government needs every penny it claims it does, and so believe that cutting taxes is harmful. I have news for you; the government will spend every penny you give it, and then every penny it can borrow. I’m waiting for proof to the contrary. The limit defines the spending, not the need. You help the government the way you help an irresponsible teenager – you cut them off. They’ll adapt and get better.
Arn? What I find troubling is you thinking you are entitled to my money. You are not. I have no problem helpping those who “CAN’T” help themselves. But I have a big issue with the others. Where does it end with you? When everyone but you has nothing left? “Any Repubic is in trouble once it’s citizens discover they can vote themselves money from the public treasury.” And I might also add, “from their neighbors wallets.” The Republic is in trouble Arn, be a part of the solution. It’s not too late to save her.
Sorry ARN, that was meant for JJ