Will there be a new Contra Costa real estate transfer tax? A 3.8% tax on all real estate transfers? No. Well, not in the way you may be thinking. There is a lot of misinformation about the “new” tax on real estate due to Obama’s Health Care plan.
Here are some facts about the 3.8% tax going into effect in 2013:
- This is NOT a real estate transfer tax or a tax upon sale
- This tax law does NOT eliminate the 250k single person capital gain exclusion (or 500k for married couples)
Here is some key information provided through research by the National Association of Realtors:
The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.
The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax.
So, if you were wondering if Contra Costa home sales would be subject to a NEW 3.8% real estate transfer tax due to the health care bill passage, the answer is no. You will need to see your accountant though to discover how this tax will impact you and your situation however as this new tax will effect some investment income (including real estate).
The 3.8% tax and how it impacts Contra Costa real estate transfer tax:
Below is an excerpt from an excellent hand-out explaining the 3.8% tax as it relates to home sales in Walnut Creek, Contra Costa and around the country:
Understand that this tax WILL NOT be imposed on all real estate transactions,
a common misconception. Rather, when the legislation becomes eff ective in 2013,
it may impose a 3.8% tax on some (but not all) income from interest, dividends,
rents (less expenses) and capital gains (less capital losses). Th e tax will fall only
on individuals with an adjusted gross income (AGI) above $200,000 and couples
fi ling a joint return with more than $250,000 AGI.
You can find some great information at this informational brochure directed toward realtors so that we can help to educate our clients on what this new investment income tax really is. Again, it is critical to check in with your CPA or tax specialist to see how this will impact you and your finances but as far as a transfer tax on all real estate? No.
Where to find more information about this subject? Check out the FAQ available through the National Association of Realtors.
Health Insurance Reform – 3.8% tax on real estate – FAQ
P.S. The health care bill, etc. does not effect the Contra Costa real estate transfer tax (es) that have been considered customary in our county.
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