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The 3.8% Tax: Real Estate Scenarios & Examples

The 3.8% Tax: Real Estate Scenarios & Examples

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Published by narwebteam

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Published by: narwebteam on Jul 05, 2012
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07/05/2012

 
 The 3.8% Tax
Real Estate Scenarios & Examples
Effective January 1, 2013
★★★★★★★★
 
Intro
Beginning January 1, 2013,
a new 3.8 percent tax on some investment income will take effect. Since this new tax will affect some real estate transactions, it isimportant for REALORS® to clearly understand the tax and how it could impactyour clients. It’s a complicated tax, so you won’t be able to predict how it willaffect every buyer or seller.o get you up to speed about this new tax legislation, the NAIONAL ASSOCIAION OF REALORS® has developed this informational brochure.On the following pages, you’ll read examples of different scenarios in whichthis new tax — passed by Congress in 2010 with the intent of generatingan estimated $210 billion to help fund President Barack Obama’s health careand Medicare overhaul plans — could be relevant to your clients.Understand that this tax WILL NO be imposed on all real estate transactions,a common misconception. Rather, when the legislation becomes effective in 2013,it may impose a 3.8% tax on some (but not all) income from interest, dividends,rents (less expenses) and capital gains (less capital losses). Te tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couplesfiling a joint return with more than $250,000 AGI.
 
 Applies to:
Individuals with adjusted gross income (AGI) above $200,000 
Couples filing a joint return with more than $250,000 AGI
ypes of Income:
Interest, dividends, rents (less expenses), capital gains(less capital losses)
Formula:
Te new tax applies to the LESSER of 
Investment income amount 
Excess of AGI over the $200,000or $250,000 amount
New ax Rate:

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