Monday, September 2, 2013

Rebound in real estate complicates new taxes

Last August, I wrote about a rumor that people selling their homes would be subject to a 3.8 percent sales tax to help pay for the Affordable Care Act or “Obamacare.”

Like many rumors, it wasn’t accurate. The tax doesn’t apply on the full sale proceeds but only a slice of any profit. It also doesn’t apply to everyone but only upper-income taxpayers. It’s not a sales tax but a tax on “net investment income.”

But as with many rumors, there is a kernel of truth to it, and the kernel has gotten bigger because of the solid rebound in real estate over the past year. Simply put, rising home prices increase the odds that some people, though still a small minority, might have to pay something at that 3.8 percent rate.

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