During the weekend, I came across a rumor that home sales in 2012 now would be taxed to help pay for the new health care law. Like any responsible person, I researched the rumor to see if it was true. I found that this rumor is apparently making the rounds via e-mails and blogs.
First, let's see what it says. Below is a variation of what I've seen online:
"Under the new health care bill -- did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after Obama's re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes (sic) your November and 2012 votes more important?
"Oh, you weren't aware this was in the Obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either (result of clandestine midnight voting for huge bills they've never read). AND, there are a few other surprises lurking."
Because this is a rumor with what is clearly a political slant, it's not surprising that
PolitiFact has taken a look at it (the quote above is from their site as well). They rated it "
Pants on Fire".
To summarize PolitiFact, it's "capital gains" or profits from investment income that are taxed for Medicare. If you look at your paycheck, you'll see a deduction on it for Medicare, but some people don't have that deduction, such as those Wall Street folks who live on "investment income." So this new tax is for investment income, but not just any investment income, so don't worry about your stocks being taxed unless you're one of the high earners that are less than 5% of the US population. If your investment income is more than 200,000 for individual or $250,000 for couples, than all dollars
past this point will be taxed at 3.8%.
But, wait! Home sales have their own exemptions, and for individuals, it's profit (not sales price) past $250,000 or $500,000 for couples. Unless you think you're going to be able to sell your house at such an awesome price that you have $250,000 in profit (again, not sales price), this isn't going to apply to you.
Using the example cited in the e-mail, of the $400,000 home, let's assume you're a single individual and that this home magically came into your possession, so any sale is pure profit. There's an exemption of $250,000, which leaves us with $150,000. At 3.8%, this is a $5,700 tax. That's out of $400,000 of pure profit. Oh, the humanity, what a terrible burden!
Another site also debunks this, and throws in some free advice:
Step One: If you read something that seems as ridiculous as this does, don’t automatically believe it. (Had Congress passed a bill that was going to cost everyone who sells a home 3.8 percent of the proceeds, don’t you think you’d have heard about it long before now? Trust me – you’d certainly have read about it here!)
Step Two: Put the “facts” into your favorite search engine. In this case, for example, I did a search for “3.8% home sales tax.”
Step Three: Read some of the results. It took my search engine about one-third of a second to point me to several articles by actual journalists written over the last several months about this particular piece of disinformation.
Remember what I said earlier about being a responsible citizen and investigating before passing on rumors and e-mails? For all of our sakes, please do.
Snopes and
PolitiFact are great sites for debunking e-mails like this.
Posts
