New Real Estate Tax

This blog is about the possible affect of the 3.8% tax that will become effective January 1, 2013 as the result of Obama Health Care.   Since this new tax will affect some San Diego North County real estate transactions, it is useful to try and understand this tax and the possible impact it could have on North County home sellers.

Most importantly, this tax does not affect most North County home real estate sales.  This tax only falls on sellers with adjusted gross income (AGI) that are above $200,000 if you are single and $250,000 if you are a couple filing a joint return.  Please talk to your CPA or tax advisor for details and to learn all your options.

If we are applying this tax to the sale of principal residence, before anything happens, you have to have a gain on your sale of over $250,000 if your are single and over $500,000 if you are a couple filing j0intly.  This elimanates most people.  Since the price of most San Diego homes has gone down considerably over the last 6 years, not many San Diego home sellers have these large gains.   And again, you have to have at least the AGI’s mentioned above.

Here is a simplified example:  You sell your personal residence for a gain of $350,000 and you are filing as a single individual and your AGI is over $200,000.  You would subtract the $250,000 from the $350,000 for a taxable gain of $100,000.  3.8% x $100,000 is $3,800.  Again, ask your CPA since many other things go into this calculation.