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Old 07-04-2012, 08:57 PM
 
168 posts, read 162,001 times
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Default Real Estate Experts: Question re: New Medicare Tax (Real Estate Sales Tax) in the ACA

I just read about the 3.8% real estate sales tax/transfer tax, written into the ACA (Obamacare) -- one of the many taxes that we'll be burdened with to fund Medicare and Obamacare.

I understand that it's not applicable to the sale of your primary home. Is that correct? Also, will sellers now have to increase their sales price by 3.8% to fund this, or do you think agents will agree to split the cost? I'm just thinking that for many sellers who are already taking a bath on their home sale, this could be an additional burden. As well, I understand that the tax is applicable in some instances to rental income. Is that correct?

It seems to me that this will be a big burden on the real estate market. Am I misreading it? Acknowledging that it's applicable to those with AGI of 200/250k, that's still a very large group of people....

Any input would be appreciated
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Old 07-04-2012, 10:10 PM
 
Location: Sonoran Desert
16,911 posts, read 19,994,502 times
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The tax does not apply to a principal residence unless you have a PROFIT of 250,000 if single or 500K if married filing jointly. What is a profit on a home, LOL? It would apply to a second home as does capital gains now. But, as you say, it only applies to those who make over 250K jointly which is about 3% of us. Very few people would be subject to this tax. It will have no impact on typical home sales.
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Old 07-04-2012, 10:46 PM
 
Location: Tempe, Arizona
4,511 posts, read 7,230,209 times
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Lots of misinformation spread about it, but As Ponderosa said, no impact for the vast majority of home owners. It is not directly a real estate tax at all. It is an investment income tax which may apply to certain real estate transactions.

http://www.snopes.com/politics/taxes/realestate.asp

It will have no noticeable affect on the real estate market.
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Old 07-05-2012, 06:42 AM
 
366 posts, read 278,416 times
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I would strongly disagree, every tax has an impact.

This has been proven time and time again.

A perfect example is that everytime there is a cut in the capital gains tax for the so called wealthy it has increased the amount of money going to the treasury...every single time.

Any extra tax, fee or other wise unwise regulation on the housing industry before it even has a chance to recover is just flat out dumb.
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Old 07-05-2012, 07:20 AM
 
Location: Oxygen Ln. AZ
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Will this apply to rental income?
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Old 07-05-2012, 07:41 AM
 
Location: Sonoran Desert
16,911 posts, read 19,994,502 times
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Quote:
Originally Posted by MotleyCrew View Post
Will this apply to rental income?
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.
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Old 07-05-2012, 08:07 AM
 
Location: In an alternate universe according to some, AKA Aspergers
10,567 posts, read 11,488,540 times
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Do we get 3.8% back if we lose money?
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Old 07-05-2012, 08:22 AM
 
254 posts, read 266,487 times
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Quote:
Originally Posted by jdahunt View Post
A perfect example is that everytime there is a cut in the capital gains tax for the so called wealthy it has increased the amount of money going to the treasury...every single time.
How is that possible?
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Old 07-05-2012, 09:13 AM
Sco
 
4,261 posts, read 2,137,061 times
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Quote:
Originally Posted by Home Addict View Post
How is that possible?
It is a timing issue. In the short term, more tax revenue flows into the treasury as people cash out investments at what they believe are temporary lower tax rates. If you analyze it over a longer period of time, the total tax revenues are lower due to the decrease in rates.

Saying that tax cuts increase tax revenue is true only if you are looking at it in the very short term.
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Old 07-05-2012, 09:46 AM
 
254 posts, read 266,487 times
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Quote:
Originally Posted by Sco View Post
It is a timing issue. In the short term, more tax revenue flows into the treasury as people cash out investments at what they believe are temporary lower tax rates. If you analyze it over a longer period of time, the total tax revenues are lower due to the decrease in rates.

Saying that tax cuts increase tax revenue is true only if you are looking at it in the very short term.
Thanks for the explanation.

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.
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