What can you tell me about the new federal real estate tax? Our son, who is in the title insurance business, says that Congress will pass a 3.8 percent tax on all real estate sales in the next session. He insists his source is "impeccable" and is advising us to sell our home now. We were going to sell in two years, downsize and move to your neck of the woods, where the winters are warm. — T.R., Joliet, Ill.
Dear T.R.: Would you believe that a member of the Florida Legislature also told me that the Obamacare bill imposed a 3.8 percent tax on the sale of all real estate? This numbskull lawyer legislator I've known for 30 years also told me that the Florida Legislature is considering a $10 million tax on the sale of all real property in the state.
Well, the 3.8 percent Obamacare tax is a "hoe-ax" that is gleefully making the rounds as if it were gospel. It's incredulous that so many intelligent people are so ready to attribute so many far-fetched, outlandish claims to the Obama legend. Now, I admire Obama as much as any conservative, but this 3.8 percent tax on the proceeds of all real estate really takes this cupcake.
It ain't true. Here's a simple explanation on how this Medicare tax really works:
Beginning in 2013, if you have a profit on your home above the $250,000 individual capital gains threshold, you will pay a 3.8 percent tax on the amount above the threshold amount. So if you make a $300,000 profit selling your home, you will owe the IRS 3.8 percent of ($300,000 less $250,000) $50,000 or $1,900. And if you're married, the threshold rises to $500,000.
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If the Florida Legislature passes a $10 million tax, the same formulae would apply.
