Obamacare Real Estate Investment Tax

By | November 7, 2012

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The bad news is that the tax does exist and the good news is that it will not affect many people at all. The tax will only be imposed on households with combined incomes above $250,000 or separate filers with an income above $200,000. The trigger is that you must make a return on the sale of the investment property above the capital gains threshold which is $250,000 for individuals and $500,000 for couples. That is a pretty high threshold. At that point the tax does apply, but only applies to the amount of income above the exclusion. For instance, if you sell a property and earn a $557,000 return as a couple, you will be subject to a 3.8% tax on $57,000 or $2,166 provided your adjusted gross income is above $250,000 for the year. If not, then there is no tax on that investment.

It is estimated that less than 4% of U.S. households earn above $250,000 a year and the median price of a home in the U.S. today is roughly $160,000, this tax will likely not raise too much money. It will effect a relatively small number of people on an even smaller number of transactions. Nonetheless, make sure to consult with your tax professional to verify if you will be impacted by this new tax.

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