10 Sep Will New Health Care Laws Impact Real Estate in 2013?
There has been a lot of buzz recently concerning a new 3.8% transfer tax that takes effect on January 1, 2013. Many homeowners believe that this new surtax could impact certain real estate transactions next year, but most homeowners will not see the effects next year at all.
The best way to determine if you’re liable for the 3.8% surtax is to speak with a tax professional regarding your specific situation. However, keeping good documentation and receipts could help shield you down the line. Financial and tax advisors recommend keeping documentation and receipts regarding capital improvements, house expenses, settlement or closing costs, title insurance and legal fees, etc… Paying for these items helps to increase your tax basis and helps lower your capital gains.
The tax is not likely to affect most people who sell homes in 2013. Those with dividends, interest, net capital gains, and net rental income need to worry the most, as that is who the new law is targeting.
If you are a homeowner with an AGI above the $200,000 and $250,000 thresholds, there is one unique situation to be aware of. If you sell your home for a substantial profit, you can still take advantage of the first $500,000 (joint filers) or $250,000 (single filers) in tax-free gains on the sale of your principal home. Any profit above these limits, however, could subject you to the 3.8% surtax.
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