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.

REALTORS® should familiarize themselves with the tax, but should advise upper-income clients or clients who have large capital gains to 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.

N.A.R. has prepared Top Ten Things You Need to Know about the 3.8% Tax and a video explaining how the tax works.