Sales tax on home sales?
| November 21, 2010 8:00 PM
Not yet. The Internet is a wonderful tool that makes mass communication a viable option for anyone with access. Unfortunately, as with any tool, there is misuse as those with less than honorable intentions use the Internet to spread rumors and create panic.
We already reported that, at our state level there is no tax on the transfer of real estate. Much rumor has persisted, on the Internet, of a Federal Tax that was itemized under the recently passed health care bill as a way to fund Medicare. Under the bill, the tax on investment income (3.8 percent) does include real estate transactions, but most homeowners have little to worry about.
The new tax, to be implemented in 2013, will apply to interest income, dividends, annuities, royalties, capital gains and rental income, but only for those earning in excess of $200,000 a year. For couples filing joint income tax returns, the tax would apply to those with income exceeding $250,000.
This new tax is expected to generate more than $30 billion annually and will be the biggest tax increase contained in the health care bill. Even so, as with the existing tax code, homeowners have the opportunity to profit on the sale of their home, up to $250,000 without being taxed. In 2013, just as before the bill's passing, a married couple is exempt from taxes if their profit does not exceed $500,000. This exception does not apply to vacation homes or rental properties nor will it under the new bill.
There is concern that this could become a "gateway" tax. Some believe that once the door is opened for new taxes, they will trickle down over time to affect all sales. For now, the tax will not affect the majority of homeowners in our area or for that matter, in the nation.
Since the most of the people in our area earn less than $200,000 a year and since our average home price is around $180,000 little impact is to be expected. Nationally, the average home price is around $170,000 so the government's expectation, as often stated, is to tax the rich. Even though you may not be rich, if you have owned a home for some time and if you sell that home at a profit of more than $250,000, you will be affected, provided your income is more than $200,000 a year. This could have an impact on longtime owners of waterfront properties at a local level. If you are one of those and have been contemplating selling, you have until 2013 to avoid the new tax.
For an evaluation of what you can expect from the sale of your home, call your Realtor.
For a safe trip home, call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664 with your questions or commentary.