Real Estate Sales Tax to Go Into Effect 2013 HC Bill

REAL ESTATE SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)

No Equity, No Problem?

Another Obama Nightmare
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?

That’s $3,800 on a $100,000 home etc.
When did this happen? It’s in the healthcare bill.
Just thought you should know.

SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)
REAL ESTATE SALES TAX

So, this is "change you can believe in"? Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax.
This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what?

Does this stuff makes your November and 2012 votes more important? Oh, you weren't aware this was in the Obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either (result of clandestine midnight voting for huge bills they've never read). AND, there are a few other surprises lurking.

Snopes:

This is a complicated section of a complicated piece of legislation, and the 3.8% Medicare tax has been frequently misreported as amounting to a 3.8% "sales tax" on all real estate transactions. This is incorrect: the Medicare tax is not a sales tax that applies to all real estate transactions; it is a tax on investment income that could result in a very small percentage of home sellers (i.e., those defined as "high earners") paying additional taxes on home sales profits over a designated threshold amount. As Sara Orrange, Government affairs director of the Spokane Association of Realtors noted in response to a repetition of the "sales tax" rumor in the Spokane Spokesman-Review:

Sara Orrange wrote: In his recent guest column regarding the impact of the health care bill, Paul Guppy of the Washington Policy Center claimed that a 3.8 percent tax on all home sales was a part of the recently passed legislation. This is inaccurate and needs to be corrected. The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the additional 3.8 percent tax on any gain realized over this threshold.

Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made. This tax is aimed at so-called "high earners" — if you do not fall into that category you will not pay any extra taxes upon the sale of your home.

As a simple example, if a couple with a combined income of over $250,000 per year decided to scale back by selling their large $2 million residence in favor of a smaller home, and they made a $750,000 profit on the sale, they would have to pay an additional 3.8% tax on $250,000 (i.e., the $750,000 profit minus the $500,000 capital gains threshold), for a total of $9,500.

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

Yeah... The usual FauxNews bullcrap... Oh, the horror... $9,500 on the sale of a $2-million dollar home, with a $750,000 profit, (in this example).

I'll bet it keeps you up at night thinking that somewhere, someone (who can afford it) might pay more in taxes.


:Snooze

Even if you feel that those that succeed deserve to be taxed at an even higher proportion than those that don't...and really feel that $1,000,000 a year is a lot of money but $40,000 is not (Both seem wealthy enough to tax the same to me),

should the concept still be suspect because it takes one government expense (medicare) and throws the dart at which segment of society should pay board. I still say, start with the people needing the service, then move on to those most closely related to it. People who have specifically managed to build equity should not be singled out.

When it comes to a home here is a specific example though could happen to just about anyone.

You buy some land in 1997, say 20 acres for $10,000 somewhere just outside of the burbs (realistic) say an hour and a half out of the city. Now the burbs are on your porch and most on the outskirts where you are don't even have to commute to the city anymore, the inner burbs hold enough jobs and resources. Now over the last 13 years you managed to save up, buy a spotty used tractor, clear some trees, and build most of your house, you really spent the time, 1000's of hours a year on weekends and evenings and whenever you were not working. You camped the 1st summer, built a yurt for the 1st winter and in 2008 you finally moved in the house unfinished. Now it is almost done and

four more years pass. Since you bought before the hoopla at a reasonable price, have more land than all your neighbors and now it is 2014 and you decide it is time to move, your dream farm is now in the burbs and you don't want the burbs. So you sell.

You put $10k into land, $90k into materials, $9k in taxes, $5k into that tractor and close to 14,000 hours into making that woodlot an estate, gardens, you name it. You sell for $500,000 because you were smart and worked your butt off. Your cost basis is $109k (the tractor was not deductible) and you profit $391k, you are not married (I mean really, you live in a yurt and you ain't 21 anymore) so you would pay this tax on $141k so you would owe about $5.5k beyond the other cap gains taxes etc.

My point is there is no respect for real people building there own homes and the time invested, the more you play games where you tax the heck out of everything because we all assume no one can take care of themselves, the more you are responsible to look at the details, and the more they don't.

14,000 x $40 (a reasonably cheap burdened carpenter or GC rate, most are higher) = $560,000 + $109,000 in hard costs = $669,00 and you sold for $500,000.

THEY HOUSE WAS A LOSS and they not only taxed you on your "gains" like before, they have a new tax for those other folks that couldn't save enough, perhaps because they were taxed too much?

You can tweak my numbers quite a bit and realize there is a pretty sizable and respectable group out there that already gets screwed in regards to real estate taxes and this only makes it worse for said group. I guess we are punished for not buying crap because the only viable economy is where everyone is completely interdependent.

Are those of you that support Obama just socialists or do you hate the idea of a fair or flat tax?

The so-called "flat tax" is not fair, and many articles have been written to show how the middle and lower classes would get screwed even worse than they are now. As attractive as it sounds to those that think abolishing the IRS and rewarding the ultra-rich is a good idea, it's nothing more than a way to screw the bottom and middle of society even worse.

And the middle class doesn't already carry the nation on its back?

A friend contacted me and told me about LJ's response so I did some further research on this to get the whole picture. Notice that LJ did not post Snopes' comment of "MOSTLY FALSE", but gave the usual rant of a :Koolaid: drinker about Tax the wealthy for the betterment of the lazy. Share the wealth, support the middle class and the lower class, is that PC? Oh, sorry, the poor!!! Is that Trickle up economics?
Oh, one more thing. Look who Snopes relies on for its information: A government representative. I have always said Snopes is a Democratic lazy research time of a husband and wife. Great credibility!!

---

http://www.snopes.com/politics/taxes/realestate.asp
Real Estate Tax
Claim: A provision of health care legislation imposes a 3.8% sales tax on
all real estate transactions.
MOSTLY FALSE
Example: [Collected via e-mail, April 2010]
3.8% tax on real estate transactions
Under the new health care bill - did you know that all real estate
transactions are subject to a 3.8% "Sales Tax"?
You can thank Nancy, Harry & Barack (and your local Congressmen) for this one.
If you sell your $400,000 home, this will be a $15,200 tax.
Remember Obama’s battle cry — take from the workers and give to the drones.
TAX ON HOME SALES
Imposes a 3.8 percent tax on home sales and other real estate transactions. Middle-income people must pay the full tax even if they are "rich" for only one day — the day they sell their house and buy a new one.

Origins: One of the provisions of the recently passed Patient
Protection Affordable Care Act (PPACA) health care legislation calls
for high-income households to be subject to a new 3.8% Medicare
tax on investment income starting in 2013:
The PPACA creates a new Code Section 1411, which will generally
impose a 3.8 percent tax on the lesser of "net investment income"
or the excess of modified adjusted gross income over a "threshold
amount" (generally, $250,000 for taxpayers filing a joint return,
$125,000 for married taxpayers filing a separate return and
$200,000 in all other cases). Net investment income generally
means the excess of (i) interest, dividends, annuities, royalties,
rents, income from passive activities, income from trading financial
instruments and commodities, and gain from the disposition of
certain non-business property, over (ii) allowable deductions
properly allocable to such income. In determining the amount of net
investment income, special rules apply with respect to dispositions
of equity interests in certain partnerships and S corporations, and to
distributions from certain qualified plans. This additional tax applies
to taxable years beginning after December 31, 2012.
This is a complicated section of a complicated piece of legislation,
and the 3.8% Medicare tax has been frequently misreported as
amounting to a 3.8% "sales tax" on all real estate transactions. This
is incorrect: the Medicare tax is not a sales tax that applies to all
real estate transactions; it is a tax on investment income that could
result in a very small percentage of home sellers (i.e., those defined
as "high earners") paying additional taxes on home sales profits over
a designated threshold amount. As Sara Orrange, Government
affairs director of the Spokane Association of Realtors noted in
response to a repetition of the "sales tax" rumor in the Spokane
Spokesman-Review:
(response) Home sales tax clarified
http://www.spokesman.com/stories/2010/a ... -salestax-
clarified/
In his recent guest column regarding the impact of the health care
bill, Paul Guppy of the Washington Policy Center claimed that a 3.8
percent tax on all home sales was a part of the recently passed
legislation. This is inaccurate and needs to be corrected. The truth
about the bill is that if you sell your home for a profit above the
capital gains threshold of $250,000 per individual or $500,000 per
couple then you would be required to pay the additional 3.8 percent
tax on any gain realized over this threshold.
Most people who sell their homes will not be impacted by these new
regulations. This is not a new tax on every seller, and that
correction needs to be made. This tax is aimed at so-called “high
earners” – if you do not fall into that category you will not pay any
extra taxes upon the sale of your home.
Sara Orrange Government affairs director
As a simple example, if a couple with a combined income of over
$250,000 per year decided to scale back by selling their large $2
million residence in favor of a smaller home, and they made a
$750,000 profit on the sale, they would have to pay an additional
3.8% tax on $250,000 (i.e., the $750,000 profit minus the $500,000
capital gains threshold), for a total of $9,500.
Given that the median sales price of existing single-family homes in
the U.S. was incomes of $250,000 or above, the Medicare tax will
likely affect only a small percentage of home sellers when it is
implemented in 2013.

Which is exactly what I posted... Thanks for verifying what Snopes had to say, since I posted the Snopes link myself.

What an incentive to save and slave away, sacrifice your youth to earn your way through graduate school by working nights and every weekend for 10 years. Then you get out of college, work to gain experience in your field and after busting your butt for 30 years you go into consulting. You are now 60+ and finally earning up to your potential, but wait, you are earning too much according to those who like to share what you have sacrificed a lifetime to achieve. It matters not what it cost you to get to this point. Yes, it thrills me to no end to share my income so that someone who does not have the brains or drive to make something of themselves can have privileges they have not earned. BTW I bring $ back to the US that most of you spend on imported oil.

My parents moved to this country because it was the land of opportunity. I was raised to believe in that. All you had to do was work hard, save and sacrifice and then in the end you could achieve whatever you desired. You could be responsible for yourself. Hummm... in my 58 years of pursing that American dream, I now discover opportunity is being redefined. Now I have an opportunity to support others who did not put in half the effort I did. Suddenly, my experience and hard work is being used against me. I'm one unhappy camper. No longer is there motivation to achieve as it stands now. Instead, it's best to underachieve, enjoy life and let others bust their ass and take responsibility for you. Yes, that really is a great way to move forward. :bash Yes, LJ, I know you have a soft spot for people who earn a lot. You fail to consider who much the spent to reach that point.

Yes... We have what is called a "progressive" tax system... Those that make the most pay a rate higher than those that makes the least. Paying 3.8% on the portion OVER $250,000 (single), $500,000 (married) in capital gains on the sale of a home where the actual PROFIT is over that floor hardly strikes me as a "hardship". Yes, since only 1.5% of all households in the U.S. have incomes of $250,000 or above, and of that 1.5% only a small percentage would be affected by a profit on such a home-sale, I find the outrage-of-the-day to be a bit overblown.

I'm also for removing the annual maximum of $106,800 for Social Security withholding. I think ALL income should be subject to the withholding, without a limit. (And I'm pretty sure that would affect me more than it would you or the rest of the anti-tax complainers on this board.) If this were the case, then the problems with SS funding would end...period.