3.8% Tax to go into Effect in 2013

3.8% Tax to go into Effect in 2013

Considering The Tax ShelterThe health care legislation created in 2013 includes a new tax that is designed to hit upper end income tax payers. This new tax is imposed ONLY on those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return).

Here’s what it applies to…

  • Dividends
  • Investment income defined as interest
  • Capital gains
  • Net rents

Despite widespread misconception this is NOT a a transfer tax on real estate sales with similar transactions. After the law passed we saw gobs and gobs of erroneous and misleading documents putting fear into many people that they would have to pay this tax regardless of this situation. Clearly the tax is designated for only a certain group of people.

This new tax does NOT eliminate the benefits of the 250k/500k exclusion on the sale of a principal residence. Only that portion of a gain above those thresholds is included in the AGI and could be subject to tax.

You should consult with your tax adviser before making any decisions regarding a tax matter.

photo by: JD Hancock
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