It's not that bad. It's actually 3.8% but it's only on the amount your gains on the home exceed $500,000 or something like that, and even then, only if your taxable income is over $250,000, so it's going to hit a lot fewer people than if it were 3.8% on any gain at any income.
Capital gains are part of your taxable income — so when you sell an appreciated asset, such as your home or stocks, that can kick your income above $200K and the 3.8 ADDITIONAL tax kicks in.
And you know how taxes go — initially only those making over $1,000,000, back when that was real money, paid 1% income tax and look at income taxes today.
That extra 3.8% on capital gains is here to stay and will be applied to everyone — I think the US already has one of the highest capital gains taxes in the world.
Compare to Russia where there is NO capital gains tax and there is something like a 12% flat tax on income.
You can read all the details of this sneaky 3.8% tax right on the IRS website:
http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs
I’m putting my house on the market at the end of March, and was scouring for details. Thanks, I’m relieved not to be getting another cost hit, the insurance itself is bad enough. I don’t know how a lot of people are going to hold it together, it’s going to be a huge ongoing hit to discretionary spending because they just won’t have much left.
As I said in my post 16 — the IRS discussion the link to which I posted in my post 17 makes it clear (their item 20) clearly shows that when calculating the threshold, income and capital gains are added, so if you do have significant capital gains, that quite likely pushes you into the bracket where you have to pay the additional capital gains of 3.8% “medicare tax”
Thanks for the info. I guess I’m safe from exceeding any of those figures. I’m still against it and still think it will be another drag on the economy.
Yes I looked at it lately as our house is going on the market soon. Was a bit relieved.