NAR publishes guide: There is no 3.8% ‘real estate’ tax

We’ve said it over and over, but the questions and comments keep coming up like a bad urban legend: There is no new 3.8% real estate tax. For whatever reason, someone started the rumor and we’ve been debunking it since then.

Back in April 2010 we wrote, “There is no new real estate tax, nor transfer tax, nor anything of the sort. Got it?”

Clearly not everyone got it, and now NAR has published an 11-page brochure explaining exactly what is taxed 3.8%:

Understand that this tax WILL NOT be imposed on all real estate transactions,
a common misconception.

Rather, when the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.

One example the brochure gives of how the tax might affect a real estate transaction is a couple that sells their principal residence for a gain (not a price!) of $525,000. If they had an income of $325,000, the tax they’d pay: $950. On a $525,000 gain. Hardly the stuff of hang-wringing and frantic, unfounded e-mails.

Click here to get your own copy of the brochure. (PDF)

About Andrew Kantor

Andrew is VAR's editor and information manager, and -- lessee now -- a former reporter for the Roanoke Times, former technology columnist for USA Today, and a former magazine editor for a bunch of places. He hails from New York with stops in Connecticut, New Jersey, Cincinnati, Columbus, and Roanoke.
This entry was posted in The Buzz. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *