Under the new health care bill all real estate transactions will be subject to a 3.8% Sales Tax.

ObamaCare New Tax on Home Sales

Sorry if this topic is political related but I think we will face a economic catastrophe if we don't cut spending, restore the value of our dollar and stop inflation.

While I agree with your sentiments, the 3.8% tax is an internet hoax. It's not in the health care law. Plenty of other bad stuff is, though.
You're probably right that your post should be in a different thread. I don't know. It'll probably start a firestorm. I almost wish I hadn't responded...

Read this and get educated about the tax:

JIM FLYNN: Report on new tax causes unfounded angst

2010-07-30 12:36:20
Much to the chagrin of encyclopedia salesmen, the Internet has become a boundless, mostly free, source of information about nearly everything. However, the Internet has also become the perfect vehicle for rumor mongering.
A recent example of this has to do with the new health care-reform act — the Patient Protection and Affordable Care Act of 2010. On March 28, Paul Guppy, vice-president of research at a Washington State research organization, wrote an article appearing in the Spokane Spokesman-Review. In his article Guppy stated there was now in place a 3.8 percent tax on home sales.
“Middle-income people must pay the full tax even if they are ‘rich’ only for a day — the day they sell their house and buy a new one,” he wrote.
Within hours, the article was flying around the Internet, with added commentary about how this sales tax would destroy lives.
Let me try to describe what the new law really does.
To begin, a new chapter — Chapter 2A: “Unearned Income Medicare Contribution” — has been added to the Internal Revenue Code. (In defense of Guppy’s inaccurate analysis, it’s important to note that Chapter 2A, like all the other chapters of the Internal Revenue Code, seems to be written with the specific intent that it should never actually be understood by anyone.) Chapter 2A does create a new 3.8 percent tax to support Medicare. The tax begins in 2013. It applies to “investment income” and affects only individual taxpayers with an income in excess of $200,000 and couples filing a joint return with an income in excess of $250,000.
Now, putting this in the context of the sale of a home, for a married couple the first $500,000 of gain from the sale of a home is exempt. For an individual taxpayer, the exemption amount is $250,000. Once a taxpayer has used up the exemption, the gain from the sale becomes investment income and is subject to a regular capital gains tax of 15 percent. Under the new law, if a taxpayer exceeds the income threshold amount stated above, the 3.8 percent Medicare support tax will also apply.
To give a simple example of how this works: Let’s assume a married couple with an annual income of $350,000 bought their home in 2003 for $400,000 and, because the home is in, say, Aspen, they sell the home in 2013 for $1,000,000. Their investment income from this sale is $100,000 ($600,000 less the exemption amount of $500,000). They will pay $15,000 in regular capital gains tax on this sale, plus an additional $3,800 because of the new Medicare support tax.
To put this matter into proper perspective, since very few people these days sell their home with a gain that exceeds the exemption amount, and since only a small percentage of taxpayers have an income high enough to trigger the new tax, the number of home sales that will be affected by this tax is going to be small.
Here’s hoping Guppy does a better job on his next research project.
—
Jim Flynn is a private attorney at Flynn Wright & Fredman LLC in Colorado Springs. Reach him at jtflynn@fwflegal.com.

http://www.gazette.com/articles/new-102274-become-internet.html

Nothing wrong with the thread as long as everyone remains civil.

We are not going to pull out of this rut in this country by taxing the hell out of everyone and creating a bunch of government red tape that increases the deficit.

Washington has a 1 plus percent unemployment rate.The rest of the country is in the high teens.We are paying for government fat in Washington while they get the benefit.

This is WHY nobody wants to give the government money in the form of higher taxes.They take and take yet do not spend the money wisely.

This is why really wealthy individuals pay few to little taxes.They set up foundations,charitable trusts,etc. to CONTROL how the money is going to be spent.

If I have 100,000 that I would have to pay in tax as income I would much rather give that money away to charities where I knew the money was going to be spent wisely and how much out of every dollar went to the cause.

I still control the benefit of the money that way instead of paying for the pork in Washington.

Look at Paul Mitchell,Bill Gates,Richard Branson,etc. They all do this instead of paying a bunch of taxes. Warren Buffet stated the Rich could afford to pay more taxes than they do.I disagree as others in that it's better to control the giving and use of the money then to give it to the cronies in Washington who couldn't balance a check book if their life depended on it.

I think this has to do a lot with real estate and what happens in the economy affect tremendously to the real estate industry.
I don't think is going to be a small percentage that will be affected with this new tax. Here in Florida, in the last 2 years, have come lot of international and out of state investors to buy properties to rent them out. This will affect all of them and therefore the tenants (which most have lost their homes in foreclosures).

Anyways, I think that is very important the next president in office. This country is bankrupt, we have to cut spending and have to stop destroying the value of the dollar, we need to restore this economy ASAP!

NAR (yeah, i know, but i'm totally serious this time) explains things very well on their FAQ sheet on this.

It is a 3.8% tax on unearned net investment income : rents, dividends, cap gains, & interest income, for peaople w/an AGI of $200k (single) or $250k (married.) Mearly selling a home [u]will not trigger the 3.8% tax.

http://www.realtor.org/small_business_health_coverage.nsf/Pages/health_ref_faq_med_tax?OpenDocument

Again, from NAR and a seperate FAQ (OK they really did a good job, here.) For earned income, salary, wages, and - you guessed it, commissions :

Expect a 0.9% tax on all earned income over $200K (single) and $250k (married.)

http://www.realtor.org/small_business_he...me?OpenDocument

These do not go into effect until 01/01/2013. Obviously there is not a lot of clear understanding of these new tax things, what they're about, when they're going to happen, how they will be applied. Before people really, super start freaking out get educated, talk to a few good accountants, have your clients talk to some as well.

*KT is not any type of CPA, and doesn't play one on TV. But seriously recommends anyone who has q's go see one. The internet does not always have all the answers. Seek professional advice.

Methinks the idea they are angling to tax landlords is a clue to the rest of us that landlordship is likely to increase in a quantum way. 3.8% is the foot in the door. It will be 15% in a decade and only serve to drive rents higher by the amount of the tax.

In the example above, the couple has a good annual income, purchased the house for $400,000 and is selling it for $1,000,000 and is paying only $18,800 in capital gains and Medicare Tax.
I think that the amount in taxes paid (3.13%) is miniscule compared to the gain.

Just another tax that creates government jobs to monitor and enforce a tax that provides new jobs for a bigger government that has to be continued to be supported hereafter and does nothing to rebuild a better America.

And it is a tax the dimwits at the state level will say as long as they are figuring out that tax we will add on a little to be sent to us at the state level so we will have even greater income to waste then we already have by just passing this new bill I'm going to write.

Maybe, after I get that passed I can get the state to fund a new staffer for me to work on my re-election stuff, nothing more important then that, oh, that other state stuff, I'll work on that after I'm re-elected, can't spread myself to thin you know.

I didn't dig through the links, so I am assuming this new tax is to help fund a health care bill as noted by the OP?

I can clear up the health care crisis. Just a warning, this might go very off topic from real estate.

Tax drinks with added sugar or artificial sweeteners. $0.01 per oz. That includes sugar, hfcs, aspartame, and any other artificial sweeteners.

Tax anything with artificial color $0.01 per oz. Food or drinks.

Tax anything with GMO food (soy and corn). Lets just ban GMO food altogether. It's already been proven GMO offers nothing better than non gmo food, and we havent fully studied the side effects of consuming it.

Tax fast food restaurants that serve garbage food. If it's fried then it gets taxed. $.10 per sandwich and $0.05 per order of fries.

If the product contains bleached flour, then it gets taxed too.

Take 50% of the tax and offer it to farmers who use organic methods of growing crops. Take the other 50% and put it towards the health care bill. I shouldn't have to pay so much for organic food.

People should pay more for insurance who have a higher body fat percentage, higher cholesterol, and higher levels of fasting glucose. This will help motivate people to change their diet and eating habits. I'm not talking about a 10% increase, it should be 50% or more.

People who have healthy levels of what I said above will pay much less in the health care. Reward people for exercising and not stuffing their face with Mcdonalds and burger king.

All you need to do is follow the health care issue backwards. People are upset because health care costs a lot of money. It costs a lot of money, because insurance companies have to pay a ton of money from claims. Insurance companies are paying a ton of money, because people are going to the doctor more, and are developing diabetes, heart disease, and other issues. People are developing these issues because of poor diet, exposure to harmful chemicals, lack of exercise, and other contaminants. People are being exposed because of our screwed up food system.

Fix the food system and that fixes the health issue.

Leave the taxes on real estate alone. You know what kind of insurance I have? I pay $55 a month for worst case scenario. If I needed something major done, then i'm covered. If I go to the doctor for the flu i'm paying 100% of the bill. I never go to the doctor because i'm never sick, or sick enough to justify going. I only go for a yearly checkup and to check my blood. I eat healthy, exercise, and use products without cancer causing chemicals.

I disagree. The problem is not what people eat, but what insurance companies charge. The cost charged is disproportionate to the health problem.

Life insurance companies set rates according to such things. Car insurance companies factor risk into rates also.

True, but at whose expense and is the risk comensurate with the cost? I don't believe it is, because I know it can be reduced. Just because the insurance companies charge what they can, does not mean they charge what it's worth.

To the OP, what percentage of your clients whose transaction closed in the past year would be taxed under this new tax? I know for me, it would be a significantly low percentage and I doubt it would hinder those eligible to be taxed from proceeding with their real estate plans.