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A friend mentioned to me last week about a 3.8% sales tax on homes which sell beginning in 2013. She said this was hidden in the health care bill. I can’t imagine our government adding this at a time when home sales are dragging down our economy. Can you confirm this?
Your friend is right about a 3.8% sales tax on homes sales in the health care bill beginning in 2013. According to factcheck.org and other sources, it is called a Medicare tax because the proceeds are allocated to shore up the Medicare Trust Fund. However, the fine print, which is couched in highly technical language, applies to a limited group of taxpayers. The tax is assessed on those with adjusted gross incomes of $200,000/year or more and only applies to profits over $250,000 from the sale of a personal residence ($250,000/year income and $500,000 profit for married couples).
For example, if an individual with an income of $225,000 bought a home in 2000 for $300,000 and resold it in 2013 for $700,000, his profit would be $400,000. The 3.8% tax would be levied on $150,000, the profit over the $250,000 margin. The tax he will owe is $5,700.
While this tax is unlikely to affect you directly, it will not help boost home sales - another reason why, if you decide to sell, you do all you can to increase your chances of getting the most for your property. Finding a good agent to help you price your home, assist you in preparing it to sell and marketing your property to get the word out is crucial in this difficult market.
If you have real estate questions, please email them to email@example.com or send to Esther Prosser, PO Box 20, Elverson, PA 19520.
Disclaimer – Esther Prosser is a realtor with Stoltzfus Enterprises, LTD, which advertises with Journal Register Co. publications.