Hope you are enjoying the fall colors and the change in our season.
Undoubtedly you have heard about the new Medicare Tax on investment income, including income from real estate. Many of us are still confused about when the new tax goes into effect, who it applies too, and what types of real estate will be impacted.
First of all it does not begin until 2013. A 3.8% tax will be levied on investment income of high-income earners. So who is a high income earner? Single persons with an adjusted gross income (AGI) over $200,000 or married persons (filing jointly) with an AGI above $250,000. The tax will be applied to the household's net investment income or the excess of AGI, over the thresholds, whichever is less.
So, if a person or a married party has an AGI that exceeds the thresholds, they will be required to pay the 3.8% tax.
The tax applies to the following types of real estate:
1. the gain from the sale of a primary residence, if the gain on the home exceeds $250,000 for single households or $500,000 for married households. The tax hit will apply only to the gain over these amounts;
2. the gain from the sale of second homes like vacation homes;
3. the gain from the sale of investment real estate;
4. the gain on the sale of commercial real estate;
5. net rental income from investment properties.
Oh joy, more tax, but not for all.
A good source for more information can be found by going to:
http://www.realtor.org/small_business_health_coverage.nsf/pages/health_ref_faq_med_tax?opendocument
Have a great fall weekend and remember - Life is a Gift...Live It!
Blessings.....
Gary Nathan
Amanda Mavis
Woodland Developments & Realty
15563 Railroad St.
Hayward, WI 54843
715-699-4040
nathan@garynathan.com
http://www.garynathan.com/
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