What’s the Real Scoop on the Rumored 3.8% Tax on Home Sales

You may have heard rumors flying that there is a upcoming new tax of 3.8% on home sales. This is not true. The National Association of Realtors 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.

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