The 3.8% Tax

Beginning January 1, 2013, a new 3.8 percent tax on some investment income will take effect. Since this new tax will affect some real estate transactions, it is important to clearly understand the tax and how it could impact you. It's a complicated tax, so it will have a different affect on all buyers and sellers.

Attached is an informational brochure.  On the following pages, you'll read examples of different scenarios in which this new tax - passed by Congress in 2010 with the intent of generating an estimated $210 billion to help fund President Barack Obama's health care and Medicare overhaul plans - could be relevant to you.

Understand that this tax WILL NOT be imposed on all real estate transactions, a common misconception. Rather, when the legislation becomes effective 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). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a joint return with more than $250,000 AGI.

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