If this is true, I missed it. In chatting with a friend this AM,

[Paper Roses]

I mentioned that I may put my house on the market in the spring. Since my husband died, the care, taxes and heating costs have put me in the poorhouse. I am one of the folks who live on only Social Security and I'm afraid of what is coming.

She told me that if I planned to sell the house, I should do it soon. Is it true, as she said, that as of 2012 that there will be a 3% sales tax on home sales? If it is true, that will drive prices even lower and slow down an already distressed market.

Geeze, one slap after another. Was she right?

[northoftheborder]

1. I hadn't heard this on fed. level. Maybe your state?

[mmonk]

2. I'm a Realtor. I'm not aware of a national sales tax.

[Indydem]

3. It's actually 3.8%.

And it isn't a sales tax, it's an additional penalty on capital gains. So if you bought your house for $50k and are selling it for $200k you will pay an additional 3.8% on the $150k unless you use your one time exemption on home sales.

[lonestarnot]

5. Isn't that proposed not in effect yet?

[Indydem]

6. It is part of the health care bill. n/t

[lonestarnot]

9. So the capital gains talk I heard this morning on CSPAN is another in addition to the one you to

which you speak? Hard to keep up.

[sinkingfeeling]

10. Not true.

http://www.newsday.com/classifieds/real-estate/real-li-1.812034/about-that-3-8-tax-on-home-sales-1.2455687

About that 3.8% tax on home sales
Friday November 12, 2010 2:10 PM By Kristin Taveira

Breathe easy, home sellers: Scary e-mails being circulated that warn all home sales will be slapped with a 3.8-percent sales tax -- $15,200 on the sale of a $400,000 home, one version of the rumor says – are not accurate.

A 3.8-percent tax will be imposed in 2013 on some investment income, and that can include income from the sale of real estate. But it only applies to individuals with an annual adjusted gross income of $200,000, or $250,000 for couples filing jointly, and only the investment income amount or the excess of income over the $200,000 or $250,000 amount will be subject to the tax -- whichever is less. So you’d need to meet the income requirements and make a profit on the sale of your home in order to have this tax imposed on it.

************************
I doubt if someone on SS is making more than $200,000.

And from Snopes: http://www.snopes.com/politics/taxes/realestate.asp

[stillwaiting]

12. Thank you!

:toast:

[Common Sense Party]

13. "I doubt if someone on SS is making more than $200,000"

Ummm...rich people get SS, too.

[sinkingfeeling]

16. There is a maximum to monthly Social Security.

http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-social-security-retirement-benefit

Maximum Social Security retirement benefit
Updated 02/07/2011 04:41 PM | ID# 5
What is the maximum monthly Social Security retirement benefit?

The maximum benefit depends on the age a worker chooses to retire. For example, for a worker retiring at age 66 in 2011, the amount is $2,366. This figure is based on earnings at the maximum taxable amount for every year after age 21.

[Common Sense Party]

20. Yes, but that doesn't address at all what I was saying.

Many people who receive the maximum SS benefit check every month are not "living on" SS. It is PART of their income. They also receive income from pensions, annuities, dividends, rental income, etc. And all that could add up to much more than $200K per year.

[Bandit]

17. Being Rich is not the same as making money.

Being on Social Security restricts the amount of "income" one can bring in. At least if you retire early. I think once you pass the final retirement age 67 (I believe) then you can make a lot more.

[Jackpine Radical]

4. That sounds absolutely insane.

Put some %%$#@ taxes on the rich, not more burden on underwater homeowners.

Any politician who proposed or voted for such an outrage ought to be driven from office.

[ProdigalJunkMail]

14. It IS on rich folk and people making a gain on their property

which in today's market is not as huge as it once was...

sP

[Jackpine Radical]

18. I didn't know it was a CG tax until someone added that point.

Anyway, how about a CG exclusion for house sales under a certain amount?

The problem with CG on things like houses is that it's not adjusted for inflation. And unless you rent it out, you generally make no income on it while you're holding it.

[randr]

7. I have not heard of a sales tax

These are usually state taxes and may apply where you live.
There is, however, a change to the mortgage interest deduction on federal returns coming soon.

[frazzled]

8. Wrong: only if your profit on the house is more than $500,000 (per couple)

That is to say, profit against the normal capital gains threshold. And even then you pay the 3.8% tax only on the amount that is over the threshold. If you bought your house for $50,000 and sold it for $200,000, you owe NO tax (to cite the example of a poster who got it wrong above). Even if you made, say $525,000 on the house sale over your original investment, you'd owe the tax only on the $25,000 -- or $950. So chill.

In his recent guest column regarding the impact of the health care bill, Paul Guppy of the Washington Policy Center claimed that a 3.8 percent tax on all home sales was a part of the recently passed legislation. This is inaccurate and needs to be corrected. The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the additional 3.8 percent tax on any gain realized over this threshold.

Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made. This tax is aimed at so-called “high earners” – if you do not fall into that category you will not pay any extra taxes upon the sale of your home.

[rgbecker]

11. I love the DU.....sorting out truth from fiction, day after day.

What would we do without fellow DUers researching these issues and setting the record straight?

[Paper Roses]

15. High earner? Never was, never will be.

3/8 of my SS goes to house taxes on this old place. I save and juggle everything just to meet the quarterly bill.

I have no idea what this place would ever sell for but it is a relief that I don't seen to fit into this tax picture. I think my house would sell for more than $250,000 but it will be my first sale(been here since 1969) and I think I am now considered at poverty level.
That is something I never in my life would have expected.

[Jackpine Radical]

19. I wrote a comment above before seeing this.

This is a reasonable provision.

[Indydem]

21. So...

If you were a middle class couple who purchased a nice little house on a few acres in Florida in 1975, and have lived there for 36 years and have lost your spouse to old age or disease, but the house sells for half a million dollars and you want to use that money to go into a retirement home or purchase a condo, you should have to pay an additional 3.8% just because your property went up in value more than the guy who bought a house in Indiana and the property only went up 15% in those 36 years? Income levels don't matter on CG and the idea that this will only target high income earners is asinine.