Clarification of 3.8 percent health care bill tax

There has been much misinformation circulating recently that the health care reform bill passed two years ago includes a sales tax on real estate.  This is false information.  It is NOT a transfer tax on real estate sales and similar transactions and does NOT eliminate the $250,000/$500,000 exclusion on the sale of a principal residence for individuals and married couples, respectively.  The law imposes a 3.8 percent tax for households in the top tax brackets on “unearned income.”  This includes capital gains.  The 3.8 percent tax only applies to capital gains above the normal exclusion.  A typical home sale will NOT incur any tax, and for the vast majority, the 3.8 percent tax won’t apply.

Upper-income taxpayers or those who have large capital gains should 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.

Note: It is an election year!