3.8% Real Estate Tax? - Get The True Scoop

Greetings,

Maybe you've been hearing rumblings recently about a 3.8% sales tax on all real estate transactions. Below is a good article from our local Wisconsin REALTORS Association Best of Legal Hotline. There are also some links that you can go to and read more about it. I have taken the liberty to reprint this in its exact form therefore you have to put up with all the disclosures and disclaimers.

This Legal Hottips article may be reprinted only if it is reprinted in its entirety, including the disclaimers above and below the Hotline questions and answers. The Wisconsin REALTORS® Association Best of the Legal Hotline Service is an educational resource intended to keep the Association abreast of legal developments and concerns involving real estate practice in Wisconsin. We look forward to your input regarding the service, especially regarding the types of topics you would like covered.

1.) General Real Estate - Miscellaneous Issues


QUESTION:
The broker has heard about an added 3.8% tax that sellers must pay upon the sale of their property. Is there such a tax and is it really 3.8%?

ANSWER:
There have been e-mail and rumors circulating that proclaim that all real estate transactions will be subject to a 3.8% sales tax starting in 2013 under the new health care legislation – that statement is clearly untrue. On the other hand, there is a 3.8% Medicare surtax that will apply to the investment income of single taxpayers with adjusted gross incomes (AGI) over $200,000 and to married taxpayers with adjusted gross incomes over $250,000 starting in 2013. The tax applies to the smaller of the household's net investment income or the excess of AGI over the thresholds. Capital gains are treated as investment income for these purposes. In terms of real estate transactions, if these taxpayers sell their homes after 2012 and the gain exceeds $250,000 for a single taxpayer or $500,000 for married taxpayers, the amount of the gain over these amounts will be subject to the 3.8% tax. The tax also would apply to the gain from the sale of a second home, investment and commercial real state and net rental income from investment properties.

READ MORE ABOUT IT:
To learn more about how the 3.8% surtax will be applied and other details of the health care legislation, review the following online NAR resources:


• Frequently Asked Questions about Health Care Reform: http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_health_ref_faqs.pdf/$FILE/government_affairs_health_ref_faqs.pdf
• Myth Busters flyer: http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_myth_busters.pdf/$FILE/government_affairs_myth_busters.pdf
• Health Insurance Reform: NAR FAQs: http://www.realtor.org/small_business_health_coverage.nsf/Pages/health_ref_faq_med_tax_earned_income?OpenDocument

This Wisconsin REALTORS® Association Best of the Legal Hotline service is provided for you by the WRA's Legal Affairs Department. The service should be considered a general statement of applicable legal principles. Given this format, it is impossible to fully address all potential legal issues which might apply in any particular situation. A determination of any individual's legal rights in a transaction can only be obtained after complete analysis of the law and its applicability to the particular fact situation. Please contact the WRA Legal Hotline if additional information is needed, or private counsel, if legal advice is needed. Thank you for using the Wisconsin REALTORS® Association Designated REALTOR® Best of the Legal Hotline service.

This HOTLINE response should be considered a statement of applicable legal principles. Given the HOTLINE format, it is impossible to fully analyze all the relevant facts in any particular situation. A determination of one’s legal rights can only be obtained after complete analysis of the law and its applicability to one’s particular fact situation. Therefore, this response does not constitute legal advice and should not be relied upon as legal advice in litigation, arbitration or ethics matters. Private counsel should be consulted if legal advice is needed or if the caller is involved in litigation, arbitration or ethics matters.






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Gary Nathan and Amanda Mavis
Woodland Dev & Realty
15563 Railroad St
Hayward, WI 54843
715-699-4040
nathan@garynathan.com
www.garynathan.com


http://www.realestatehaywardwi.com/