If you own a Home you must read this!
The National Association of REALTORS is all over this and working to get it repealed, before it takes effect. But, I am very pleased we aren’t the only ones who know about this ploy to steal billions from unsuspecting homeowners. How many REALTORS do you think will vote Democratic in 2012? Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home, etc. When did this happen? FACT: It’s in the health care bill and goes into effect in 2013!!! Why 2013? Could it be to come to light AFTER the 2012 elections? So, this is “change you can believe in”? Under the new health care bill all real estate transactions will be subject to a 3.8% Sales Tax. If you sell a $400,000 home, there will be a $15,200 tax.
Kessler’s Take:
Let me start by thanking whoever started this email for nothing else other than citing the National Association of Realtors for advocating consumer rights as they are the number one watch dog group in the housing industry. The group does not always get the credit they rightfully deserve. The email goes on to point out an upcoming tax that is to be effective January 1st of next year.
In a nutshell if a homeowner sells his/her house after January 1, 2013 they will be hit with a $3800 tax for every $100,000 their property sells for. Well the email is not 100 percent accurate. Yes, this new tax does take effect next year and yes there are some who are going to get hit with a new tax but the majority of people will not. The National Association of Realtors developed an informational brochure titled “The 3.8% Tax – Real Estate Scenarios & Examples” which goes into great detail how the tax would be imposed.
For starters if the seller is an individual they would be exempt if their adjusted gross income is under $200,000, and if the sellers are a couple filing jointly they would not be affected if their adjusted gross income is under $250,000. So, before we go any further if you are one of the 49 out of 50 households inAmericamaking less than $250,000 in adjusted gross income you need to read no further.
For the under 2 percent of homeowners left that could qualify for this tax the next set of exclusions apply. For an individual this tax does not come into affect if their capital gains is not greater than $250,000 for the year they sell their home, for couples filing jointly it is $500,000. Now how many couples out there will realize a profit of $500,000 on the sale of their home?
So, we are now left with a small amount of people who submit taxes with income greater than the threshold and who have made a huge profit on the sale of their property. What happens to these few folks? The 3.8 percent tax is applied to the profit above the threshold of $250,000 for those filing as individuals and $500,000 for those filing jointly. An example would be if there was a $550,000 gain realized from the sale of a home sold by a couple the $50,000 excess of the $500,000 allowed would be taxed at a rate of 3.8% which would equate to $1900.
Personally I feel any tax tied to a real estate transaction in our current market is a detriment but I do understand the government is looking for revenue streams and those that attach to the “rich” are easier to sell to the general public than those that affect everybody.
As with any tax or policy change information is key. Many homeowners are out there contemplating the sale of their residence and are concerned about this upcoming tax. While it is great to see an email circulate warning of a potential issue it is a shame the research was not done to accurately portray the issue.
Knowledge is power and in this case it could prevent many sleepless nights.
Kessler’s Forecast:
This will have such a small impact on the housing market as it affects so few and those it does affect will be making such a profit the tax should not impede their future plans.
What will continue to impact the housing market and the overall economy is bad information. Unfortunately the media does not always get it right as they are human too. The next time you receive an email do a little research before it is treated like gospel.
RATES
Kessler’s Take:
The 30 year fixed remained at 3.87% nationally according to Freddie Mac’s Weekly Survey. Last week I forecasted the rates would increase to 3.90%. This week upcoming should see 30 year fixed nationally increase to 3.90%. In the coming month rates should stay around the 4.00% mark.
Kessler’s Forecast:
Last week (2/16/2012) – 3.90%;
1 week (2/23/2012) – 3.90%;
1 month (3/28/2012) – 4.05%;
3 months (6/3/2012) – 4.15%;
6 months (9/10/2012) – 4.25%;
12 months (2/24/2013) – 4.55%
Reports
Previous Week:
Monday, February 13th
Kessler Housing Report
KMG Mortgage Consulting
Thursday, February 16th
January Housing Starts
U.S.Census Bureau
Upcoming Week:
Friday, February 22nd
January Existing Home Sales
National Association of Realtors
Friday, February 24th
January New Home Sales
U.S.Census Bureau
