It must be Spring (or close to it) because my inbox is filling up with claims of all kinds of things, from people who lost their wallets in Spain and need me to wire them funds, to an incredible number of dating websites with singles waiting for me to join (how much do they really know about me if I get these?). The one that is being forwarded commonly in the last few weeks, that causes a high level of concern by anybody involved in real estate is the message that starting next year, all real estate transaction will carry a 3.8% transfer tax as part of the Obama health care law.
As much fun as it might be to debate whether real estate transfers or transactions can, should, or will ever, be taxed…this is not the Great Satan that you should lose much sleep over. The facts are this transfer tax applies to the so called “wealthy” earning $250,000 or more jointly or $200,000 as an individual, if the sale of a house produces a gain of $250,000 (filing single) or $500,000 (married filing jointly). Even if the gain falls under these qualifiers, there are additional considerations that involve the household’s tax situation. Keep in mind, this tax also only applies on principal residence sales after the $250,000/$500,000 gain exclusion.
I know taxes get everybody in an uproar when they potentially apply to their own interests. Housing affects a significant portion of the population so this tax does get people upset. Just please understand who needs to be upset and who likely will not be affected. Here is a link to an article the National Association of Realtors have posted. Also, if you want a deeper understanding, a down loadable brochure has been made available.