Beginning January 1st, 2013 a new 3.8% tax will be imposed on some investment income. In turn this will have an effect on some real estate transactions. The NATIONAL ASSOCIATION OF REALTORS® has created a brochure to help agents better understand this legislation and how it might affect some buyers and sellers. Having now read this information from NAR, I can tell you that the level of misunderstanding from agents, clients, and just the public in general is high. I have included a section from the preface of the brochure to help you better understand the thrust of this new legislation. No doubt that TAX is an emotionally charged issue, but having some real world scenarios will help you better understand the coming change.
Understand that this tax WILL NOT be imposed on all real estate transactions, a common misconception. Rather, when the legislation becomes eﬀective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples ﬁling a joint return with more than $250,000 AGI.
I have included the link to the full brochure below. The scenarios illustrate the legislation in pragmatic and understandable terms.
[button link=”http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_invest_inc_tax_broch.pdf/$FILE/government_affairs_invest_inc_tax_broch.pdf” style=”info” color=”red”]Investment Income Tax Brochure[/button]