Read My Lips

by Doug Love

“Under the new health care bill, did you know all real estate transactions will be subject to a 3.8% Sales Tax? If you sell your $400,000 home, there will be a $15,200 tax……… Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it, either (the result of clandestine midnight voting for huge bills they’ve never read)………….”

The above is from an email that has been passed around like a bad germ. It causes people afflicted by it to say things like, “Hey, what the heck is this new Real Estate Tax all about?” People afflicted tend to suffer fear and loathing, and if untreated, can display angry outbursts, such as, “These government jerks are ripping us off again?!” One man called and said “I was going to sell my house – I’ve owned it for 50 years- now that the wife is gone. But I’ll stay here and rot before I give up any new government tax. They can pry it from my cold, dead hands.”

Let’s be perfectly clear. Or read my lips (politician-speak). There is no new Real Estate Tax.

There is a new tax that was porked into the health care bill, but it is not simply a real estate tax. It’s an income tax based on “unearned income” to pay for Medicare costs. “Unearned income” means profit on investments, sometimes known as Capital Gains. Real estate could be part of that income.

If you make less than $200,000 a year single-income, or $250,000 a year double-income, you don’t need to worry about any new tax.

If you do, the tax is 3.8% of any income from investments over the $200,000 or $250,000.

The income tax exclusion for the sale of a personal residence is still in place. No change. You can still sell your house and walk tax-free with $250,000 if you are single or $500,000 if you are married.

If you receive the germy email described above, please hit “Delete.” Please resist the “Forward” button.

Thank you.