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.