By JLP | September 17, 2010
I received the following email this morning:
I am a long time reader of your blog and enjoy it very much. Thanks for all the hard work you put into it.
I have a question that I can’t seem to find a straight answer to, and am wondering if you may consider a future post on this subject.
My question is regarding the Obamacare tax that is to be imposed on 1/1/2013 and involves the 3.8% tax on all home sales. I’m trying to determine if that is a tax on the entire sale price of the home or a tax on the capital gains above the $250,000 threshold for individuals/$500,000 threshold for couples.
Thanks and have a great weekend.
From what I found by doing a Google search, is that this new tax will affect couples who make $250,000 or more (or $125,000 for singles) and is based on the gain minus the capital gains threshold. Snopes looked into the matter and offered up this example:
As a simple example, if a couple with a combined income of over $250,000 per year decided to scale back by selling their large $2 million residence in favor of a smaller home, and they made a $750,000 profit on the sale, they would have to pay an additional 3.8% tax on $250,000 (i.e., the $750,000 profit minus the $500,000 capital gains threshold), for a total of $9,500.
Personally, I hate this idea. I mean, those who make more than $250,000 per year are already paying medicare tax on all their income as there is no cap like there is on the social security tax. I also do not like the fact that the tax system is becoming more and more complicated. With all the different taxes on all the different items, it’s very difficult to make informed decisions with regard to taxes.
I would rather the government create a tax code that says, “You make this much, this is how much you pay.”