The Infamous 3.8% tax Simplified

Beginning January 1, 2013, a new 3.8 percent tax on some investment income will take effect. This new tax was passed by Congress in 2010, with the intent of generating an estimated $210 billion to help fund President Barack Obama’s health care.

Understand that this tax will NOT be imposed on ALL real estate transactions. It will only affect some income from interest, dividends, rents and capital gains. As far as real estate goes, it only comes into effect after the forgivable gain ($250,000 for individuals & $500,000 for couples). Also it will only affect individuals with an adjusted gross income (AGI) above $200,000 ($250,000 for couples). Additionally, the new tax applies to the LESSER of; Investment income amount or the Excess of AGI over the $200,000 or $250,000 amount.

If you still meet all that criteria here’s how it would pencil out;

John and Mary sold their principal residence and realized a gain of $525,000.  They have $325,000 in AGI (before adding taxable gain).  The tax would apply as follows: AGI Before Taxable Gain $325,000 Gain on Sale of Residence $525,000 Taxable Gain (Added to AGI) $25,000 ($525,000 – $500,000) New AGI $350,000 ($325,000 + $25,000 taxable gain) Excess of AGI over $250,000 is $100,000 ($350,000 – $250,000) Lesser Amount (Taxable) $25,000 (Taxable gain) Tax Due $950 ($25,000 x 0.038).

 

For more information send me an email or text for a copy of an 11 page report.

Scott Stephens

(714) 801-6230

http://www.OrangeCountyRealEstates.com

About Scott Stephens

I have been a licensed Realtor in North Orange County since 1994 and a hard working community leader, since buying my first home here, in 1988. Having been the recipient of many awards in both these areas of my life, I guarantee that you will love my service. "I'm Just Here to Help"
This entry was posted in Uncategorized. Bookmark the permalink.

29 Responses to The Infamous 3.8% tax Simplified

  1. Nice article Scott on a topic that has confused a lot of consumers.

    • Thank you, Mike, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  2. Brian Hogan says:

    It looks great, Scott. Simple, to the point, and easy to read. You picked a great title for the blog; makes people look twice, but sums it up very well. Looking forward to future articles.

  3. Rebecca Siris says:

    Great article! Thank you.

    • Thank you, Rebecca, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  4. It always better when someone Simplifies.
    Good Job!

    • Thank you, Richard, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  5. loanguyphil says:

    Hey Scott – I like it! Looking forward to reading your posts!

    • Thank you, Phil, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  6. Pat Little says:

    Good topic. I’ve gotten calls regarding this tax. It’s very confusing to many consumers.l

    • Thank you, Pat, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  7. Charlie says:

    I love it! Keep up the great work Scott!

    • Thank you, Charlie, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  8. Angus "Tex" Claytor says:

    Scott,
    Not being real estate minded, I can’t comment other than it looks of interest to many. I recommend; Continue!

    • Thank you, Tex, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  9. Dan Lookabill says:

    A very worthwhile article. If you have the tools, why not add a simple online “calculator” to your website?

    • Thank you, Dan, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  10. Lois Elmore says:

    Scott, Even I understood the article. That’s says something good. Most people are like me andnumbers are complex. Good job.

    • Thank you, Lois, for taking the time to check it out and for your kind comments. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

  11. April says:

    Seriously!….I have indents around my ankles already!

  12. Rudy Lauterbach says:

    Hi Scott,
    I like the detail. I will definite follow your blog.
    Suggestion for future comments: Reverse mortgages for seniors (over 65) backed up by HUD or some government agency. (Currently have one.)

    • Thank you very much Rudy, for the comments & the Follow. Funny you should mention “Reverse Mortgages”… that IS one of my planned topices for the near future.

    • Thank you, Rudy, for taking the time to check it out and for your kind comments. I will definately write about those in the very near future. Please do me a favor & click “FOLLOW” to see my future posts. I’m sure there will be a couple that may interest or help you.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s