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Calculating the new Medicare tax
New real estate tax
For more information on the new real estate tax for high-income home sellers, visit "javascript:HandleLink('cpe_0_0','CPNEWWIN:NewWindow%5Etop=10,left=10,width=500,height=400,toolbar=1,location=1,directories=0,status=1,menubar=1,scrollbars=1,resizable=1@http://www.realtor.org/small_business_health_coverage.nsf/pages/health_ref_faq_med_tax?opendocument');"
WASHINGTON – July 20, 2010 – The healthcare reform law passed earlier this year includes a little-discussed tax on some forms of real estate transactions that will impact a small number of high-end home sales.
The tax, which supports Medicare, might affect couples with adjusted gross incomes greater than $250,000 a year and singles with incomes above $200,000. Existing home sale tax breaks remain in place.
The tax is levied on the gain, figured as the lesser of the sale of the house or the amount by which the sellers’ income exceeds the appropriate threshold.
Here’s an example offered in the Washington Post:
• Profit on home sale: $600,000
• Sellers’ income: $300,000
• Deductible amount under current law for a married couple: $500,000
• Capital gains tax due on $100,000 (not a new law): $15,000
Beyond the capital gains tax, the hypothetical sellers’ with income over the threshold must also pay the new Medicare tax, which would be calculated in one of the following ways:
• Taxable profit: $100,000
• Difference between annual income and taxable profit: $200,000
• Difference between $300,000 income and $250,000 threshold: $50,000
Since the sellers pay the new 3.8 percent tax on the lower number, the IRS considers only the $50,000. Consequently, they owe the IRS $1,900.
Source: Washington Post, Benny L. Kass (07/17/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
New real estate tax
For more information on the new real estate tax for high-income home sellers, visit "javascript:HandleLink('cpe_0_0','CPNEWWIN:NewWindow%5Etop=10,left=10,width=500,height=400,toolbar=1,location=1,directories=0,status=1,menubar=1,scrollbars=1,resizable=1@http://www.realtor.org/small_business_health_coverage.nsf/pages/health_ref_faq_med_tax?opendocument');"
WASHINGTON – July 20, 2010 – The healthcare reform law passed earlier this year includes a little-discussed tax on some forms of real estate transactions that will impact a small number of high-end home sales.
The tax, which supports Medicare, might affect couples with adjusted gross incomes greater than $250,000 a year and singles with incomes above $200,000. Existing home sale tax breaks remain in place.
The tax is levied on the gain, figured as the lesser of the sale of the house or the amount by which the sellers’ income exceeds the appropriate threshold.
Here’s an example offered in the Washington Post:
• Profit on home sale: $600,000
• Sellers’ income: $300,000
• Deductible amount under current law for a married couple: $500,000
• Capital gains tax due on $100,000 (not a new law): $15,000
Beyond the capital gains tax, the hypothetical sellers’ with income over the threshold must also pay the new Medicare tax, which would be calculated in one of the following ways:
• Taxable profit: $100,000
• Difference between annual income and taxable profit: $200,000
• Difference between $300,000 income and $250,000 threshold: $50,000
Since the sellers pay the new 3.8 percent tax on the lower number, the IRS considers only the $50,000. Consequently, they owe the IRS $1,900.
Source: Washington Post, Benny L. Kass (07/17/2010)
© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688
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