From John Packham, Government Affairs Director, at the Scottsdale Association of Realtors:
Misleading emails and other communications about the 3.8% Medicare tax in the health care reform law continue to circulate. You might have received one or more of these emails. The messages usually say that the 3.8% tax is imposed on unearned income that includes the sale of a principle residence. However, the tax that’s being referenced is far narrower and only has the potential to impact a small sliver of high income households who receive investment income. The $250,000-$500,000 capital gains exclusion remains in place. NAR has created a brochure with more information on who is impacted and it is available on REALTOR.org: http://bit.ly/bhS8H6
The brochure includes the following details about home owners who are impacted to this new tax on some investment income which goes into effect January 1, 2013:
Applies to:
- Individuals with adjusted gross income (AGI) above $200,000
- Couples filing a joint return with more than $250,000 AGI
Types of Income:
- Interest
- Dividends
- Rents (less expenses)
- Capital gains (less capital losses)
Formula: The new tax applies to the LESSER of
- Investment income amount
- Excess of AGI over the $200,000 or $250,000 amount
The brochure contains examples of various transaction and the resulting tax.
Additional information can also be found at: www.REALTOR.org/healthreform
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