New Summary Explains the 3.8% Tax
NAR has prepared a new guide, Top 10 Things You Should Know about the 3.8% Tax.
The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.
The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax.
REALTORS® should familiarize themselves with the tax, but should advise upper income clients or clients who have a large capital gains to seek the guidance of a tax professional. The amount of tax will vary from individual to individual because the elements that comprise AGI differ from taxpayer to taxpayer.
Visit the links below for additional in-depth information.