So I just got this from one of my last right wingy friends. A casual google hasn’t turned up anything but the same glurge. Can someone point me to the actual law. Or to a “refudiation” Thanks.
So can anyone find the specific spot in the health care legislation, and not the GOP’s interpretation of the legislation?
actually, this is the most utterly perfect example of the way that poors are being manipulated into voting for the GOP.
That 3.8% tax on unearned incomes only applies to 200k/250k singles/families.
How convenient that they neglect to mention that.
http://money.cnn.com/2010/03/22/news/economy/medicare_tax_increase/index.htm
they also neglect to mention that homeowners get their standard cap-gains exemption on the sale of their primary residence (the article doesn’t address that specifically, but it does mention that tax-exempt CGs don’t count)
when in doubt, go to www.snopes.com for rumor verification. In this case, the specific is at Home Sales Tax | Snopes.com
Heh, I went to snopes first and did not find this. My googlefoo is lacking. Thanks.
AFAIK, there are no Federal sales taxes; those are set up on a state, county, or city level.
Yes… this is grossly misrepresented. Here’s a scenario:
Joe the Plumber and his wife sell their house for $1 million. We all know they make more than $250k in income most years. They will pay 3.8% extra, but first they will subtract:
- the original purchase price. Let’s say $200,000 - they bought it a long time ago.
- all the improvements over the years. Let’s say $100,000.
- selling costs, which will be at least a $60,000 commission.
- $500,000 Sec 121 capital gains exclusion.
So we have $140,000 left that would be subject to the 3.8% additional Medicare tax.
It is a particular issue with home sales, of course, because the home sale itself can help to put you up over the $250k limit. I’m not a big fan of how the law is worded for just this reason. It’s the kind of thing I would write to a senator about and ask for a change (that is, if I wasn’t in WA state with the kind of senators who would support this law regardless of what I think).
But instead of a factual discussion of serious issues, the e-mail is the kind of misinformed, over-exaggerated crap that passes for politics nowadays.
What did you search? “Home sales tax” hits the first entry. So does “sales tax”, “3.8%” or “real estate”. Searching just “home” has it come up as the 38th result, “tax” is the 6th result.
What if the home sells for less than they originally paid due to sinking property values?
Then there is no capital gains, and thus no tax. You have to sell it for more than $500k over what you paid, and have AGI over $200/250k for this tax to even apply.
It’s not a “sales tax” at all - it’s an unearned income tax.
In fact you have a capital loss, which you can subtract from any other capital gains you might have attained, reducing or eliminating your capital gains tax. You can even spread the loss over multiple tax years.
Not for your personal residence. From IRS.gov:
Wow, that must really suck for a lot of people who are underwater on their mortgages.
ha ha ha that’s not the half of it. Your forgiven debt (If your mortgage company did so) if you took a bath on the sale of your house is taxable as income.
(this was suspended from 07-12 by the Mortgage Forgiveness Debt Relief Act)
Wow.
I asked because I am thinking of selling my house. Its dropped considerably, but since I was aggressive about paying the mortgage down I’m not underwater, thank god, even though i’ll probably sell for 60-70K less than I paid including renovations.
But the rules don’t make sense to me. How can a profit be taxed as a capital gain, but if you lose money its not a capital loss?
I mean, in the larger scheme it does make sense - the IRS makes money, the homeowner gets it in the shorts. But it seems rather unfair.
Interestingly, a constitutional amendment was passed this year in Montana that prohibits sales tax on real estate. The propaganda for it was full of ominous threats that “some Helena politicians want to double-tax you”, but oddly, nobody was able to say just who these politicians who wanted it were.
I think the thinking was that the vast majority of the things we actually use become losses if we sell them, and it would be a nightmare if they were all deductible. I mean, imagine if I could buy underwear for $10 and a year later sell them, now dirty, to a poor guy for $1 and then claim a loss of $9 on my taxes.
But perhaps an exception should have been made for very large purchases, such as houses, and in extreme situations, such as the current housing market collapse.