by Janet Owens
on Wednesday, April 25th, 2012 at 3:46pm.
Don't be fooled by all the rumors swirling around the Internet and among friends about Obama health care legislation and the 3.8 percent property tax. Here's what really happened:
The Health Care and Education Reconciliation Act of 2010 and Patient Protection and Affordable Care Act were signed into law in March 2010. The acts impose a 3.8 percent investment tax on unearned income above certain levels to help fund Medicare. Numerous state attorneys general have filed lawsuits challenging the Acts, and the Supreme Court has heard oral arguments on these Acts. A decision should be reached sometime this summer. IF they are to be ruled legal and constitutional, then the following will go into effect on January 1, 2013.
First of all, only taxpayers with Adjusted Gross Incomes of ABOVE $200,000 for a single filer and $250,000 for a married couple.
Then, the capital gains exclusion on the sale of a primary residence of $250,000 for a single filer and $500,000 for a married couple.
In other words, if you are above the income thresholds, you would have to have a capital gain on the sale of your home that is more than $250,000 for a single person or $500,000 for a married couple. Let’s say that you’re married and purchased a home for $1 million. You then sell your home for $1.6 million. You have a capital gain of $600,000 BUT the first $500,000 is excluded. You would only owe 3.8% tax on the amount over $500,000 which in this case would be $100,000. You would be paying $3,800 in taxes.