There are rumors going around the internet right now that all real estate transactions will be subject to a 3.8% federal sales tax. I’ve received several questions from clients about what they’ve seen, and many people are concerned. Good news: these rumors aren’t true.
The National Association of Realtors has issued a statement to quell fears. Stephanie Singer, a spokeswoman for the Washington-based Realtors association, says, “This is grossly inaccurate. It’s not a sales tax on all properties.”
As with most rumors, there is a grain of accuracy. There is a new 3.8% Medicare tax on unearned income, which will take effect in 2013. So some taxpayers will be responsible to pay a surtax on income received through the sale of a principal residence. However, the new tax will only apply to single taxpayers with a modified adjusted gross income (MAGI) in excess of $200,000 and married taxpayers with a MAGI in excess of $250,000 if filing a joint return, or $125,000 if filing a separate return. Those fitting these categories will pay only on the amount of income that exceeds the thresholds in Sec. 121 ($250,000 for single taxpayers; $500,000 for joint returns).
So although there are new tax laws affecting real estate, they’re not what rumors are purporting.