At Cassidy Associates Real Estate and Property Management Services, we are preparing for an impending tax increase that might be relevant to you and your real estate investments. This 3.8 percent tax may impact a small group of home sellers beginning in January of 2013. This tax is part of the 2010 Affordable Healthcare Act that was passed by Congress and signed by President Obama.
In order for the tax to apply to you as a home seller, you must have earned capital gains of at least $250,000 or $500,000 off the sale of your home or property. The $250,000 number applies to an individual and the $500,000 number applies to a couple or a joint tax filer. Home sellers who made less than $250,000 to $500,000 off the sale of their homes are exempt from this tax.
If you do have a capital gains of at least that amount, you must also be at a high income level for the tax to potentially apply. For a single tax filer, this high income threshold is $200,000 per year. For a joint filer, it is $250,000 per year. Both the capital gains and the high income requirements must be met before you as a home seller become subject to the additional 3.8 percent tax on the income you received from the sale of your home.
When it comes to matters of personal finance, investment income and tax matters, it is always a good idea to check with your attorney, CPA or tax professional before taking any action. These experts might have some advice on how best to handle any potential tax liability in the New Year as a result of the sale of your home or property. This information is only intended as general information and not tax or legal advice.
According to the California Association of Realtors, only about two or three percent of home sellers will be affected by the 3.8 percent tax. If you are wondering whether you will need to budget for this tax, or if you have any other questions related to this matter, contact us at Cassidy Associates Real Estate and Property Management Services. You can reach us at (619) 275-2525, and make sure you read our next blog on this subject, which will highlight the 10 things you need to know about this 3.8 percent tax.