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Is there REALLY a sales tax in the Obamacare plan on the sale of my home?

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PatientProtectionActThe answer to that question is yes…BUT. The Patient Protection Affordable Care Act, better known as Obamacare, does place a 3.8% tax on investment income, which includes unearned income from capital investments, sometimes referred to as capital gains. However, the tax only applies to individuals with “other income” in excess of $200,000.00 and married couples with combined income in excess of $250,000.00 AND only on the “profit” in excess of $250,000.00 for an individual and $500,000.00 for a married couple.

For example, assume that a Buyer purchases a home for $100,000, sells it years later for $750,000.00, and has a “profit” of $650,000 from the sale. If the Buyer’s income is LESS THAN $200,000.00 ($250,000.00 for a married couple) there is no Obamacare tax. If, however, the Buyer has an income in excess of $200,000.00 ($250,000 for a married couple), the Buyer would pay a tax on the “profit” that exceeds the threshold of $250,000.00 for an individual and $500,000.00 for a married couple, or $15,200.00 for a single person ($650,000.00 -$250,000 = $400,000 x .038= $15,200) or $5,700.00 for a married couple ($650,000.00 - $500,000.0 = $150,000.00 x .038 =$5,700.00).

According to studies the Obamacare tax would exclude 98% of the population. There is so much controversy over this Bill that it is unlikely that it will remain in its present form, but as it is written at this time, the foregoing would apply.

This blog is written for information purposes only and is not to be construed as “legal advice” or a “contract to provide legal services.” A person with questions concerning financial issues and income tax issues should consult a qualified tax professional.

From our offices in Decatur, Alabama, we represent clients in Morgan, Madison, Cullman, Lawrence, and Limestone Counties, including the communities of Decatur, Huntsville, Madison, Hartselle, Cullman, and Athens.

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