Is There a 3.8% House Seller Tax in the Health Care Bill?

by Jan Richey | August 13, 2012

With the 2012 Presidential election just months away, many are discussing claims made in the Administration’s Health Care Bill, including the possibility of a 3.8% tax on home sales.  To research the bill (and understand it in its entirety) would be a daunting task for many … so The KCM Crew has once again put it in terms we can grasp.  Below are excerpts from their blog.  To read the entire post, click here.

Fact explains it this way:

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.)

As The KCM Blog mentions, and The Jan Richey Team fully agrees, always consult with your accountant for the most up-to-date tax information.

Photo courtesy of – TAXES sign