Remember the old adage, good news travels slow, but bad news travels fast. Well, several months ago the rumors started flying fast that Congress buried a real estate sales tax into the Healthcare bill that was signed by the President last spring. Yes, that is partly true... There is a provision in the Healthcare bill that does impose a 3.8% tax on the sale of certain real estate. Well that's only part of the story. “Certain real estate” does not include sales that most Americans and Realtors will be involved in.

 

Here are the rumors and the truths behind them...

 

MYTH: Congress hid this provision of the bill deep within the language and no one saw it.

TRUTH: This provision was well discussed in Conference committee as a means to help fund part of the Medicare provisions. While it is true that several members of Congress voted on the bill without reading it, that is a common occurrence and not unique to this bill. Members of Congress often vote on a bill without reading it.

 

MYTH: This matter will affect every real estate sale in the country and will destroy our economy.

TRUTH: The 3.8% sales tax on real estate will be imposed on those who earn more than $250,000 Adjusted Gross Income per year (married couples) and who sell a property that provides them with a profit of more than $500,000. That's profit, not proceeds. The Congressional Budget Office stated that less than ½ of 1% of American households would earn over $250,000 and have more than $500,000 profit on the sale of a property. And, only the portion that is above the $500,000 is taxed.

 

Thus, it is clear that this provision will only affect a minute portion of the sales we encounter and clearly will have no impact on the day to day real estate transactions that you will see

 

If you are going to spread the news, please be sure to spread the total and correct news...and not repeat the e-mails and messages that said EVERY sale would be taxed with this.