According to REcolorado, the housing market in the Denver metro and surrounding area continued its cooling trend in September. As inventory levels and prices remain steady, the market is seeing a slow shift to one that is more pleasing to the buyer.
There is a new fear among those selling real estate. The fear is that there is a tax on all real estate transactions under Obamacare. There’s no need to worry; not every transaction will be taxed. Let’s look at what this tax really will be.
The tax affects investment properties, and only after certain income requirements. It’s not a sales tax, but a levy tax. The tax was created as a Medicare tax of 3.8% for high income households. Not all real estate transactions are subject to this new tax, nor will all investment transactions be subject to the additional rate.
The first hurdle that needs to be cleared for the tax to apply to your transaction is your household has to earn a combined income of $250,000.00 or greater, and individuals must earn more than $200,000.00. Clearly, this stipulation alone doesn’t apply to the average home seller.
Next, the investment property must have a return on investment above the capital gains threshold of $250,000.00 for an individual or $500,000.00 for a couple.
So, basically you have to earn $200,000.00 individually, or $250,000.00 combined and sell the investment property for more than $250,000.00 individually, or $500,000.00 combined for the Obamacare tax to affect your real estate deal.
Hopefully, this clears up some confusion about the new tax. If you have any further questions regarding selling real estate we will be happy to help you, so give us a call.