Like most Americans, you are undoubtedly happy that the election is over. You may not be happy about the result, but you must be happy it is over. And like most folks, you are probably wondering what it will mean for your own plans. Especially your real estate plan!

One area of complete confusion is found in the health care legislation, known  as Obamacare. Maybe one reason that there is confusion is the fact that real estate related income tax is somehow found in healthcare legislation. But that is an issue for another day!

Now, I am not an accountant, or a lawyer, but here is the real estate agent spin on it:

  1. First the tax is applied only if your total income for the year is in excess of $200,000. For married couples filing jointly the magic number is $250,000.
  2. You will still have the first $250,000 of home-sale related gain excluded from taxable income. The joint filing number here is $500,000.

So if you don’t sell your house for at least $250,000 more than you have in it, NO TAX!

  1. This is not a transfer tax that will ever be levied at the time of purchase.
  2. It is not paid when you sell your home, but on that year’s filing.
  3. The formula for how much you will pay is dependent on your Adjusted Gross Income, and only applies to capital gains, net rental income, interest and dividend income, including the appreciation of your home in excess of the above mentioned exclusions.

So if you have $500,000 in income and no capital gain, or home-sale gain – NO 3.8% TAX!

And if you have $200,000 of gain from selling your home, but that is your only income – NO 3.8% TAX!

  1. If you do become subjected to the tax, it is only applied to the amounts over the exclusions.

So if you do have a gain that takes you over the $200,000 exclusion, then your tax is 3.8% of the overage. If you have income of $80,000, and sell your house for $201,000 more than you paid for it, then your 3.8% tax is $38. And so on…

For more details, click here to view a summary provided by the National Association of Realtors.

For a more general description, and to assess the potential for gain in your own house, call Damian Gerard at DAMIAN GERARD REALTY GROUP today – 314-614-4377 or visit


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