Obamacare’s 3.8% Real Estate Sales Tax

UPDATE:

FactCheck.org looked into the e-mail that’s been circulating and says that the 3.8% home sales tax is more nuanced than claimed by the e-mail. This is from FactCheck.org:

At the last minute, Democratic lawmakers decided on a new 3.8 percent tax on the net investment income of high-income persons. But the claim that this would amount to a $15,200 tax on the sale of a typical $400,000 home is utterly false.

The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on “net gain … attributable to the disposition of property.” That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is “taken into account in computing taxable income” under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)

The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: “Gross income does not include … excluded gain from the sale of a principal residence.”

And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. “Some home sales would see a tax increase under this bill,” Ahern told us, “but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple).”

So there you have it. The sort of people who would have to pay the tax might include, for example:

  • A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
  • An “empty nester” couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy.

However, a typical home sale would not incur any tax. In March, for example, half of all existing homes sold for $170,700 or less, according to the National Association of Realtors. Obviously, none of those sales could possibly generate a $250,000 profit, and so none would be subject to the tax.

Thus, for the vast majority, the 3.8 percent tax won’t apply. The Tax Foundation, in a report released April 15, said the new tax on investment income (including real estate) “will hit approximately the top-earning 2% of families” when it takes effect in 2013.

That being said, even if the 3.8% real estate sales tax will affect the top-earning 2% of Americans, this is STILL atrocious because it’s just another sneaky method of the Obama and the Democrats’ socialist income redistribution. Not to mention, a tax on the sale of our homes has NOTHING to do with health care!

~Eowyn (9/23/10)

I’ve posted on this before, but we can use a reminder.

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? 

Gosh! When and how did this happen?

It’s in the Obamacare bill, aka the Patient Protection and Affordable Care Act, which was approved by both houses of Congress and signed into law by Obama on March 23, 2010.

This 3.8% real estate sales transaction will go into effect in 2013, presumably after Obama’s reelection.

This tax will especially target the retiring generation who often downsize their homes. Is this Hope and Change great or what? 

You can thank Barack, Nancy, Harry, and your Democrat senators and representatives for this tax — none of whom actually bothered to read the Obamacare bill before they voted and signed it into law. Nancy Pelosi even had the temerity to tell the American people that “we have to pass the bill so that you can find out what’s in it.”

Read about Obamacare’s 18 other taxes HERE.

Remember to vote Conservative on November 2! No Democrats! No RINOs!

H/t beloved fellow May!

~Eowyn

19 responses to “Obamacare’s 3.8% Real Estate Sales Tax

  1. The transparency promised by Barack and Nancy is “as clear as mud”!
    It is beyond egregious, how these jackals rob everyone with a modicum of resources and success.

  2. Dave from Atlanta

    Of course Obama will not sign any bill that repeals his precious legislation, but hopefully the first act of our REPUBLICAN president in 2013 will be to sign the bill that repeals this monstrosity.

    As an interesting side note, I saw an article a few days ago whose focus was the twenty states that are challenging the constitutionality of the “required” purchase of insurance in Obamacare. Apparently many bills come complete with a clause that states that if any specific part of the bill is removed or rescinded the remainder of the bill stays intact and in force.

    Apparently, in spite of 2000 pages of new laws and regulations, the authors of Obamacare did not bother to include that type of inclusion clause. Therefore, if the courts rule in favor of the twenty states, the entire Obamacare bill will be null and void, pending of course, similar results upon the appeal.

  3. Heard about this, but didn’t realize just what a vast sum it is until I saw it in writing. It is unbelievabe, but who can sell their house any more with this economy? Also, I am certain our house is worth WAY less than is listed on our propery taxes.

  4. On the list of dumbest statements ever, this has to be in the top 10: “we have to pass the bill so that you can find out what’s in it.” And what does that sales tax have to do with healthcare? Oh, funding it, even though they’ve stated the healthcare bill isn’t sustainable. Maybe that comment isn’t in the top 10, but it has to be close.

  5. Looking for sex? Vote Democrat; you’ll get screwed every day!

  6. Unfriggin believable. And libs wonder why this bill is not favored by the majority. IDIOTS!

  7. Anonymous, what a great comment! Priceless!

  8. This is why I dont keep my wallet in my pocket anymore, the governments hands take up too much room

  9. So, I’m guessing that this overtaxed, ‘retiring generation’ will refuse to have their health care costs covered by the socialist tool Medicare? Oh right, sorry, I guess that’s different…

    • Hey, tim,

      You can wipe that smug smirk off your face. Americans who work pay Medicare taxes. Why shouldn’t they, at age 65, get Medicare health coverage?

  10. we have worked for decades to recieve social security and medicare this is not an entitlement we have paid for it with our hard work to build this country. now quit giving it away to illigals and other countries.

  11. ronald davidson

    what has this got to do with healthcare???????!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  12. Are you insane? You just posted the facts that this would only affect a tiny portion of the population, a portion I might add that like Romney, already pay at a lower tax rate than the rest of us. And then you go on to bash Obama and still make it look like he is out to get the little guy. How sad you are? Wait until Romney, god forbid, gets his hands in it. You may see your home mortgage interest deduction gone, there will be no healthcare asistance, medicare will disappear for most since they won’t be able to make up for the cuts Ryan wants, and social security, Yeah right. I could not care less what you fools do. I have given up trying to speak up. I am in the “grandfather pocket” and will get my medicare and social security. So you Romney/Ryan fans, enjoy the ride to the poor house. Suckers.

    • Great DNC talking points!

      Glad you are grandfathered. Too bad your kids & grand kids won’t be so lucky as they’ll be working their arses off for a broke government.

    • Just don’t go on Medicare… it’s $716bil short so Occupy Whateverists can get free boob jobs, abortions and sex changes so they’ll vote Democrat.

    • Gosh, Thomas, you’re all heart aren’t you about your children and grandchildren’s generations, not to mention America’s wellbeing — just as long as you get your slice of the Entitlement pie.

      If I were you, I wouldn’t be quite so gloatingly sanguine about getting your Medicare and Social Security. Haven’t you heard? Social Security will start running out of cash in 6 years, Medicare follows. I was gonna give you URL sources, but then why should I bother? You can damn well look them up yourself. The info is in FOTM’s archives and on the net.

  13. Anthony Nardiello

    Welcome to The New World Order

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