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Will there be a Federal 3.8% Real Estate Sales Tax in 2012?

There is a scary email circulating that says there will be a Federal Real Estate Sales Tax starting in 2013 for the sale of a home. Here are the facts:

The 3.8% tax is not a Sales Tax.

It is not true that the tax scheduled to start January 1, 2012 will affect all home sales. But it can affect some home sales and sales of investments such as real estate.

The 3.8% surtax on "investment income" applies when your adjusted gross income is more than $200,000 ($250,000 for joint filers). "Investment income" includes Dividends, Interest, Capital Gains, House Sales, Rent, Annuities, etc.

One also has to remember that there is an exemption of $250,000 from gains on the sale of a personal residence that you have lived in for two years as your primary residence ($500,000 for a married couple). Therefore, for a married couple that is selling their home, the tax would apply only if their gain on the sale of the home exceeds $500,000 and they have a combined adjusted gross income of greater than $250,000.

As always, be sure to consult with your accountant, attorney and financial adviser.

Written by Robert J. Penny.

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