New House Tax Rumors Are Misleading…

In short, if you’re a “high earner” and you sell your home at a substantial profit, you might be required to pay an additional 3.8% tax. However, given that the existing home sale capital gains exclusion on a principal residence ($250,000 allowable gain for individuals, or $500,000 for couples) still stands and no Medicare tax will apply for gains within those limits, that the bill’s definition of “high earners” encompasses less than 5 percent of all taxpayers, and that the median sales price of existing single-family homes in the U.S. was only $170,700 in March 2010, the Medicare tax will likely affect only a small percentage of home sellers when it is implemented in 2013.

In a real practical sense, I could only wish that this were our most significant issue at the moment. Gains on real estate sales aren’t the problem that most concerns home owners today. That day will eventually return. And it is possible that some of us may gain enough on a sale to pay a tax. You should have such a problem!

This information is not meant to serve as tax advice. Remember, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information, as it applies to your individual set of circumstances.

And oh by the way, make it a habit to check-out the facts first!

May the market be with you.

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