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Important to know: 3.8% tax on some investment income

Beginning January 1, 2013, a new 3.8% tax on some investment income will take effect. This new, complicated tax will effect some real estate transactions, but is difficult to predict how it will affect each and every buyer or seller. Attached is an informational brochure with examples of different scenarios of when this tax will apply. It’s important for individuals to know what this tax means and how it might affect you if you plan to sell an investment property after December 2012.  It was passed by Congress in 2012 with the intent of generating an estimated $210 billion to help fund President Barack Obama’s health care and Medicare overhaul plans. 

A common misconception is that this tax will effect all real estate transactions, however this is not true. Rather, it may impose a 3.8% tax on some income from interest, divined, or rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income above $200,000 and couples filing jointly with more than $250,000 AGI.

3.8% Tax Brochure

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