New Health Care Reform Bill Charges 3.8% Tax On Sale Of Residential Real Estate
The new Health Care Reform Bill has implemented a provision to charge a 3.8% sales tax on the sale of homes in the upcoming years ahead. Although, this stipulation only applies to single tax payers who make more than $200,000 a year or joint tax payers who make more than $250,000. The Bill states that those individuals who make $200,000 or more a year would not pay the tax stipulation on the first $250,000 worth of profits earned. The same goes for the joint tax payers who earn more than $250,000 a year. Those individuals would not have to pay the 3.8% sales tax on the first $500,000 earned in profits.
For many individuals who own real estate, it could be quite a few years before they work off carry forward losses from real estate activities from the past several years, so income thresholds would not be an issue either. “The 500K profit threshold pretty much eliminated most home sales unless the homes are selling for millions of dollars, which is a very small percentage of homes.” This provision may cause a bigger issue concerning commercial property owners. Many commercial buildings cost millions of dollars, but these buildings have the possibility of appreciating a small percentage but increasing in value from $250K to $500K in net terms. When the time comes for an owner to report the sale of his property, the income would be increased by the net profit from the sale of the building. This provision is sure to raise revenues for some individuals, but even more so for the government.