A $100k gain above the exemption level would be subject to the tax.
Is that clear?
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Stinkdyr wrote:
Not in the original chain email you posted, no.
"Under the new health care bill all real estate transactions will be subject to a 3.8% tax on cap gains above 250k for singles/500k married couples, including gays."
That sentence means that if the cap gains are above 250k for singles or 500k for couples filing jointly, then it's subject to the tax. 100k is not above that threshold.
Now, that being said, the entire thing is wrong anyway. Sorry, there are numbers and facts there and everything. Might not be as authoritative as a chain email, but whatcha gonna do?
http://www.snopes.com/politics/taxes/realestate.asp This is a complicated section of a complicated piece of legislation, and the 3.8% Medicare tax has been frequently misreported as amounting to a 3.8% "sales tax" on all real estate transactions. This is incorrect: the Medicare tax is not a sales tax, nor does it apply to all real estate transactions; it is a tax on investment income (income which may or not derive from the sale of property) only for persons who earn more than the amounts specified in the bill.
First of all, the Medicare tax will be imposed only on individuals with an income above $200,000 and couples with a joint income more than $250,000, a figure which currently excludes about 97% of all U.S. households. Second, the tax will not be assessed on every house sale, but only on real estate transactions that produce profits over a specified dollar amount. As Sara Orrange, Government affairs director of the Spokane Association of Realtors noted in response to a repetition of the "sales tax" rumor in the Spokane Spokesman-Review:
In his recent guest column regarding the impact of the health care bill, Paul Guppy of the Washington Policy Center claimed that a 3.8 percent tax on all home sales was a part of the recently passed legislation. This is inaccurate and needs to be corrected. The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the additional 3.8 percent tax on any gain realized over this threshold.
Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made. This tax is aimed at so-called "high earners" — if you do not fall into that category you will not pay any extra taxes upon the sale of your home.
For example, let's assume that a couple with an income of $325,000 bought a house in 2004 for $300,000 and resold it in 2013 for $850,000, thus producing a $550,000 profit. Since U.S. law allows a couple to exclude from their gross income profits of up to $500,000 from the sale of their principal residence, the taxable gain from this sale would be $50,000 (i.e., a $550,000 profit minus the $500,000 exclusion), and the couple's taxable income would now be $375,000 (i.e., the original $325,000 plus the $50,000 of taxable profit from their home sale). The 3.8% Medicare tax would now apply to whichever of the following dollar figures is the lesser:
• a) The amount by which the couple's taxable income now exceeds the $250,000 income threshold level.
• b) The amount of taxable income gained from the sale of their home.
In case (a), the dollar figure would be the couple's taxable income ($375,000) minus the income threshold level ($250,000), or $125,000.
In case (b), the dollar figure would be amount of taxable income gained from the sale of their home, which, as detailed above, was $50,000 (i.e., $550,000 profit minus the $500,000 exclusion).
The second dollar amount is the lesser of the two, and therefore the couple would have to pay an additional tax of 3.8 percent of $50,000, which would amount to $1,900. (If the hypothetical couple had realized less than a $500,000 profit on the sale of their residence, none of that gain would be subject to the 3.8% tax.)
The referenced tax is therefore not a tax on all real estate sales; it is an investment income tax which could result in a very small percentage of home sellers paying additional taxes on home sales profits over a designated threshold amount. In short, if you're a "high earner" and you sell your home at a substantial profit, you might be required to pay an additional 3.8% tax. However, given that only about 3% of U.S. households have incomes that exceed the specified income threshold amount, the existing home sale capital gains exclusion on a principal residence ($250,000 for individuals, $500,000 for couples) still stands, and the national median existing-home price in January 2012 was only $154,700 , the Medicare tax will likely affect only a very small percentage of home sellers when it is implemented in 2013.
