With 2013 just a little more than a month away, the questions about the 3.8% Medicare Tax have become more prominent again.
In a nutshell, the tax can possibly affect people who have an upper level income ($200,000 or more per individial; $250,000 or more per married couple), have sold a home and have a capital gain of more than $500,000 on that sale. The reality is even people that meet the two criteria listed here might be subjected to this tax. Might, because there are several factors that determine who qualifies and whom doesn't. The tax affects some people that have investment income and because capital gains taxes are considered investment income, this is where real estate was quickly targeted in association with this tax.
The truth: It is NOT a real estate transfer tax that will affect everyone.
The National Association of REALTORS has prepared a brochure that explains the details and provides a few scenario examples that I am happy to send to anyone who would like to see it. Simply call me or email me at firstname.lastname@example.org if you would like to request a copy.