There is a good bit of misinformation and simply a lack of explanation regarding the new 3.8-percent tax that will affect some real estate transactions taking place after Jan. 1, 2013.
The first key thing to understand is that this tax will not affect every person or transaction. When the legislation becomes effective in 2013, it may impose a 3.8-percent tax on some (but not all) income from interest, dividends, rents (minus expenses) and capital gains (minus capital losses).
The tax will apply only to individuals with an adjusted gross income (AGI) above $200,000 and to couples filing a joint return with more than $250,000 AGI.
Therefore, this tax should not be an impediment to the growing housing recovery in our market, where the average home price falls in the range of $170,000. There are few ZIP codes in our market that have an adjusted gross income higher than $200,000, and the means for computing the taxable income vary by transaction type as well.
The tax was approved by Congress in 2010 as part of the funding mechanism for the health care reform act. It is scheduled to produce $210 billion dollars over a 10-year period, more than half the total new expenditures in the health care reform package. While passed in 2010, the many features of this complex legislation have different starting dates; hence this becomes effective in 2013.