Posted on 11/21/2010 9:37:25 PM PST by Libloather
‘Obamacare’ tax on home sales greatly exaggerated
Sunday, November 21, 2010 03:02 AM
Q: There has been much talk in the papers and online about a tax on home sales starting in 2012 or 2013. The law is reported to be part of the Obama health-care bill. Is it true? How much would it be? My wife heard on the radio that the tax would be 10 percent or 15 percent.
A: There’s a tiny kernel of truth to this story but not much else.
As part of the health-care bill, Congress voted to add a 3.8 percent tax on investment income over $250,000. That would include investment income made from the sale of a primary residence, but with the following qualifications: In any sale of a primary residence, the first $250,000 (for those filing as individuals) or $500,000 (for married couples filing as such) is excluded from the additional tax; and, as Factcheck.org put it, “Only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject” to the tax.
(Excerpt) Read more at dispatch.com ...
What's entirely unclear from the wording of the given reply is...what is income?
Is it the gain, or is it the gross proceeds?
Suppose a couple bought a home for $750K and now (under this new assessment) sells it for $550K? Do they now owe .038* $50,000 = $1900? Or, do they have no gain?
WTF?? Since when is 3.8% of anything unimportant. Tell you what...let some politician sell his $1 million home and send me the check for $38,000 and see how trivial they think it is.
Great. The writer cites factcheck.org as an authoritative source.
“Great. The writer cites factcheck.org as an authoritative source.”
I was thinking the same thing.
And there ya have it. If you're tax-cheat Charlie (and I think you are) don't worry about it. Swept under the rug. Forgotten about. No problem.
It could be 4.8%?
Rope is cheap.
Time to start stringing these commie bastards up from lamp posts.
I’m no expert, but that sounds like an investment loss, not investment income. I’d take it a single person who bought a house for $200K, sold it for $550K, would have to pay $3.8K. That is, 3.8% on that $100K of gain over the first $250K of gain.
Yeah, and the AMT affected less than 200 tax filers when it was introduced in 1969....
“I’m no expert, but that sounds like an investment loss, not investment income. I’d take it a single person who bought a house for $200K, sold it for $550K, would have to pay $3.8K. That is, 3.8% on that $100K of gain over the first $250K of gain.”
Nope, you’re confusing a few things. First, if it’s the couple’s primary residence, the IRS has *NEVER* considered losses in price to be anything but tough luck. It has NEVER been characterized as an “investment”. Gains, on the other hand, have typically been given very favorable treatment: Up until about 15 years ago, IIRC, if you bought a more expensive pri res, usually the whole gain was considered tax free. If you cashed out, then you achieved LTCG treatment. Then, maybe around Y2K; singles could absolutely exclude $250K of sheer gain, couples $500K of gain. That was by far the fattest gift the tax code has ever given to the general public.
“I’d take it a single person who bought a house for $200K, sold it for $550K, would have to pay $3.8K. That is, 3.8% on that $100K of gain over the first $250K of gain.”
Well, the thing is that the wording is unclear, which was the stimulus (heh) for my original post. What you posit is the way it works now, today. But it works that way ONLY because there is that $250K “exclusion from realized gain”. You’re talking about “gain” a term whose meaning is pretty clear: The delta between output and input. “Income” is another story, at least to me. You can have income and not enjoy a nickel of “profit” or “gain”. Who knows how these geniuses will interpret these terms in our brave new world. Maybe you buy a house for $250K and sell it for $250K and owe taxes on your income, the amount that falls into your hand upon sale, $250K, or taxes of $9500. Or, maybe you pay taxes on the delta between your down payment and the actual cash you receive at the close of escrow. That I doubt, because loans are not taxable events.
But who the hell knows? We have a Congress that, 40 days away from a massive, massive tax change deadline, cannot seem to make up its mind as to what the American people can expect. The estate tax situation is jaw dropping. With changes, a $2 MM estate will pay $550K in taxes after 1/1/11. Right now: Nothing. Is that big enough a difference for you? Five Hundred and Fifty Thousand!! That is one big smelly check!!
Frankly, I view the failure to settle this as a top-tier dereliction of duty. And it will affect *EVERYONE*. I have said this before and I will say it again: You are going to see and hear an ENORMOUS hue and cry somewhere around Jan 15-30 when millions and millions of people are suddenly missing $50, $120, $150, $220 out of their paychecks and...they will get hit with those new OD fees the banks told you all about 45 days ago. Remember? The banks will be collecting BILLIONS in OD fees in January. Mark my words.
btt
You’re quite right about the IRS not giving relief for a home purchase ‘loss’, but above the exemption that you cite (which I once was able to use handsomely) it does tax for the ‘gain’. Remember, capital gains are considered to be unearned ‘income’; and even with the exemption only the gain, not the gross sale price, has been considered a form of income.
Again, I’ve no idea as I have no specific knowledge in the area, but just speculating from the sounds of it, they would be taxing that gain beyond the specified exemption, including the part that had previously been exempt, under this scheme.
That is, 3.8% on that $100K of gain over the first $250K of gain.’’
Commissions on the sale are deductible & also the ‘freshening up costs done within 24 months before the sale. 6% commissions on $550K would be $33,000.
That drops the taxable amount to $67,000. 3.8% of $67,000 ==$2546 of money that they are intent on stealing from you.
Think this will help home sales??? I don’t.
They have absolutely NO SKIN IN THE GAME. They are just stealing your money & your hard work from taking care of your property.
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