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It is a investment income gains tax, not a real estate tax. It would apply to rental income less expenses if your AGI is over $250K joint. Even then it is not straight forward as it would apply to the lesser of the amount that your rental income pushed you over the 250K or the rental income.
There are numerous internet sites that explain the tax and debunk the misinformation that has been circulated by the opponents of ACA.
...or debunk the misinformation that has been circulated by the PROponents of the ACA... I don't care if it's called a real estate tax or an investment income gains tax. A tax is a tax is a tax...or a mandate, depending on how SCOTUS interprets it
I was just curious to hear real estate gurus like Captain Bill's take on it. I feel like this is going to impact a lot more people then perhaps you're thinking it will. And it concerns me that it's being done now, when the market is so precarious and so many homeowners here in PHX are still underwater. But I'm certainly not an expert. I appreciate your input.
Nobody should be paying capital gains tax anyway (since the money has been taxed when you earned it). And even if you tax it, the corresponding capital loss tax deduction should have been equal (and not limited to 3000 a year).
However, it should not matter whether you are wealthy or poor. To either target or benefit the wealthy is just wrong.
Not at all - the uber-wealthy often inherit their egg & can live off the gains, without paying any tax at all if the gains aren't taxed.
W2 employees have no where to hide their income.
Not taxing gains leads to creating a privileged class that gets all the benefits of citizenship without adding anything to the economy.
Of the potential 3% that might be subject to the tax, I'd bet that almost none actually pay the tax. By using trusts and obscuring the ownership of these properties, they'll likely pay nothing.
If only the uber-rich & the government they own were better at *math*, we could solve quite a few serious problems with our economy & take the "heat" off them to pay up.
Over 10% of the country is employable, but not employed to their potential. Getting even 5% of those people employed fixes social security, makes local governments fat with revenue, and makes the economy scream.
Unemployed people have the bestest tax rate ever- 0%!
Unemployed people also get free healthcare & it costs *more* than insuring them would, because they wait to go to the emergency room until they're almost dead, when the root cause might have been fixed with $10 worth of penicillin.
"overpaid" autoworkers held up the economy in my old state (Michigan) for 50 years, getting rid of hundreds of thousands of them (all at once) bankrupted the same state. The "ripples" from that are echoing here in Arizona right now. Instead of moving to Arizona to retire & spending time in our hospitals getting new bionic knees & hips, they're hunkered down in the snow belt & putting off those "elective" proceedures because of the co-pays.
Fix employment & healthcare and the masses quickly forget about "the rich" and instead they'll worry about cable-tv rates & gas prices.
Not at all - the uber-wealthy often inherit their egg & can live off the gains, without paying any tax at all if the gains aren't taxed.
W2 employees have no where to hide their income.
Not taxing gains leads to creating a privileged class that gets all the benefits of citizenship without adding anything to the economy.
Of the potential 3% that might be subject to the tax, I'd bet that almost none actually pay the tax. By using trusts and obscuring the ownership of these properties, they'll likely pay nothing.
If only the uber-rich & the government they own were better at *math*, we could solve quite a few serious problems with our economy & take the "heat" off them to pay up.
Over 10% of the country is employable, but not employed to their potential. Getting even 5% of those people employed fixes social security, makes local governments fat with revenue, and makes the economy scream.
Unemployed people have the bestest tax rate ever- 0%!
Unemployed people also get free healthcare & it costs *more* than insuring them would, because they wait to go to the emergency room until they're almost dead, when the root cause might have been fixed with $10 worth of penicillin.
"overpaid" autoworkers held up the economy in my old state (Michigan) for 50 years, getting rid of hundreds of thousands of them (all at once) bankrupted the same state. The "ripples" from that are echoing here in Arizona right now. Instead of moving to Arizona to retire & spending time in our hospitals getting new bionic knees & hips, they're hunkered down in the snow belt & putting off those "elective" proceedures because of the co-pays.
Fix employment & healthcare and the masses quickly forget about "the rich" and instead they'll worry about cable-tv rates & gas prices.
Not at all - the uber-wealthy often inherit their egg & can live off the gains, without paying any tax at all if the gains aren't taxed.
W2 employees have no where to hide their income.
Not taxing gains leads to creating a privileged class that gets all the benefits of citizenship without adding anything to the economy.
Of the potential 3% that might be subject to the tax, I'd bet that almost none actually pay the tax. By using trusts and obscuring the ownership of these properties, they'll likely pay nothing.
If only the uber-rich & the government they own were better at *math*, we could solve quite a few serious problems with our economy & take the "heat" off them to pay up.
Over 10% of the country is employable, but not employed to their potential. Getting even 5% of those people employed fixes social security, makes local governments fat with revenue, and makes the economy scream.
Unemployed people have the bestest tax rate ever- 0%!
Unemployed people also get free healthcare & it costs *more* than insuring them would, because they wait to go to the emergency room until they're almost dead, when the root cause might have been fixed with $10 worth of penicillin.
"overpaid" autoworkers held up the economy in my old state (Michigan) for 50 years, getting rid of hundreds of thousands of them (all at once) bankrupted the same state. The "ripples" from that are echoing here in Arizona right now. Instead of moving to Arizona to retire & spending time in our hospitals getting new bionic knees & hips, they're hunkered down in the snow belt & putting off those "elective" proceedures because of the co-pays.
Fix employment & healthcare and the masses quickly forget about "the rich" and instead they'll worry about cable-tv rates & gas prices.
I feel like my head is going to explode every time I hear the word "uber-rich" used to describe a couple who makes 250k. FYI - they ain't uber-rich!! They are your neighbors, living in modest homes and driving modest cars and sending their kids to public schools. You factor in monthly college loan payments for two or three or four degrees earned by the "uber rich" couple, a few sets of braces and college tuition for their kids, vet bills for dogs who require more medical treatments then an 80 year old man with emphysema, car repair bills and a new AC unit or roof repairs for their house, and believe me, they're NOT rollin in the dough like you claim they are. So an additional 3.8% tax on their home sale might, in fact, be a problem for them. Or additional taxes paid on rental income could, in fact, be an issue. I'm not saying that it is for everyone. And yes, many wealthy people hide their income and evade taxes. But don't lump everyone that you perceive as "uber-rich" into that group, because it's simply not the case. And, frankly, I know a few people who made LESS then 100k and hid their income and evaded taxes, so that behavior is most certainly not relegated to only the "uber-rich."
This is the basic message to REALTORs from NAR, who asks us to familiarize ourselves with it, but not to advise clients about it:
"The 3.8% tax is imposed ONLY on those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return). The tax applies to investment income, defined as interest, dividends, capital gains and net rents. These items are all included in an individual's AGI. A formula will determine what portion, if any, of these types of investment income would be subject to the tax.
The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.
The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax."
So, my understanding is that it will affect my rentals, my investor clients' portfolios, and the vast majority of my buyers/sellers in no way whatsoever on the purchases or sales of their homes.
It is a investment income gains tax, not a real estate tax. It would apply to rental income less expenses if your AGI is over $250K joint. Even then it is not straight forward as it would apply to the lesser of the amount that your rental income pushed you over the 250K or the rental income.
There are numerous internet sites that explain the tax and debunk the misinformation that has been circulated by the opponents of ACA.
> I feel like my head is going to explode every time I hear the word "uber-rich" used to describe a couple who makes 250k. FYI - they ain't uber-rich!!
Well maybe not uber-rich- that's, well, Romney-level- but definitely well-off, especially for Arizona. With a great deal to be thankful for these days.
As far as impact on real estate prices and sales- I think it's in the noise.
Not at all - the uber-wealthy often inherit their egg & can live off the gains, without paying any tax at all if the gains aren't taxed.
"overpaid" autoworkers held up the economy in my old state (Michigan) for 50 years, getting rid of hundreds of thousands of them (all at once) bankrupted the same state. The "ripples" from that are echoing here in Arizona right now. Instead of moving to Arizona to retire & spending time in our hospitals getting new bionic knees & hips, they're hunkered down in the snow belt & putting off those "elective" proceedures because of the co-pays.
Fix employment & healthcare and the masses quickly forget about "the rich" and instead they'll worry about cable-tv rates & gas prices.
zippyman: great post. When in 2005 the upper 1% amasses as much of the national wealth and income as last seen 1929, the supply - demand balance in the economy became so stretched it lead to another near-complete economic meltdown as in the Great Depression. The masses (=demand) were again so impoverished after more than 10 years of real-income losses that they could not keep up. The supply by the rich could no longer be bought, resulting in a deflationary depression. Only massive interventions by the FED and government to support demand prevented the complete destruction. If we only remembered Marriner S. Eccles from the 1930s:
"As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth ... to provide men with buying power. ... Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. ... The other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."
I feel like my head is going to explode every time I hear the word "uber-rich" used to describe a couple who makes 250k. FYI - they ain't uber-rich!! They are your neighbors, living in modest homes and driving modest cars and sending their kids to public schools. You factor in monthly college loan payments for two or three or four degrees earned by the "uber rich" couple, a few sets of braces and college tuition for their kids, vet bills for dogs who require more medical treatments then an 80 year old man with emphysema, car repair bills and a new AC unit or roof repairs for their house, and believe me, they're NOT rollin in the dough like you claim they are. So an additional 3.8% tax on their home sale might, in fact, be a problem for them. Or additional taxes paid on rental income could, in fact, be an issue. I'm not saying that it is for everyone. And yes, many wealthy people hide their income and evade taxes. But don't lump everyone that you perceive as "uber-rich" into that group, because it's simply not the case. And, frankly, I know a few people who made LESS then 100k and hid their income and evaded taxes, so that behavior is most certainly not relegated to only the "uber-rich."
Perhaps you misunderstood my post, I certainly wasn't advocating for this tax, only pointing out that we have much bigger fish to fry here. The bottom line is that the government needs a lot of dough to pay its bills, and the easiest way to get that money is through income taxes on those that are unemployed. Shrinking the ranks of "overpaid" workers also shrinks the tax rolls.
Unemployed workers don't mind paying taxes on income. They're happy to pay & we could use the bucks!
Personally, I wouldn't mind paying a million dollars a year in taxes, even If that was at a 70% rate. I'd still be better off than I am now.
Perhaps you misunderstood my post, I certainly wasn't advocating for this tax, only pointing out that we have much bigger fish to fry here. The bottom line is that the government needs a lot of dough to pay its bills, and the easiest way to get that money is through income taxes on those that are unemployed. Shrinking the ranks of "overpaid" workers also shrinks the tax rolls.
Unemployed workers don't mind paying taxes on income. They're happy to pay & we could use the bucks!
Personally, I wouldn't mind paying a million dollars a year in taxes, even If that was at a 70% rate. I'd still be better off than I am now.
Joe the plumber was a boob who didn't know math.
Yeah, I guess I'm misunderstanding your point. How is it that the easiest way for the gov't to collect money is to get it through income taxes from the unemployed? They're not working so they're not paying federal income taxes. And, in fact, many chronically unemployed or very poor people will vote for tax increases for the very reason that they're NOT paying taxes so, in their eyes, it doesn't effect them and it probably feels kinda good to stick it to the rich b/c, who cares, those uber rich people can afford it. And maybe, if you worked 15 hour days and mortgaged yourself to the hilt to build a business that finally started paying off after years and years of hard work, you might feel a bit differently about paying 70% of your income in taxes. Or maybe you wouldn't, and more power to you....you could always pay 70% now in the form of donations to the gov't. But I have a problem with a 70% tax rate, especially when I see what the gov't is doing with the money they're taking from me. Bridges to nowhere, $600k meetings in Vegas, and $500 hammers? No thanks.
I do agree with your point that the gov't needs a lot of dough to pay its bills. But that does not give them carte blanche to continue spending haphazardly and simply raise our taxes any time they need a few extra bucks.
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I don't care if it's called a real estate tax or an investment income gains tax. A tax is a tax is a tax...or a mandate, depending on how SCOTUS interprets it 
Thanks for the explanation.
