As the Federal budget debate gains a greater share of media attention, home sellers in Chevy Chase are watching closely. Meanwhile, there is a new tax already on the books as part of the Affordable Care Act which will affect some Chevy Chase home sellers in certain situations. Here are the basics.
Chevy Chase Home Sellers and the 3.8% Tax
We won’t keep you in suspense. The 3.8% tax is not a real estate tax; it is a form of capital gains tax. Therefore, it does not affect every Chevy Chase home seller, but it will affect home sellers who realize profits on their home sale above exempted thresholds. In these cases, the profits from the sale are considered unearned income and subject to the 3.8% tax.
The first $250,000 of home sale profit is exempt from capital gains taxes, assuming the home was your primary residence for at least 2 years out of the last 5. If you’re married filing a joint income tax return, your tax protection doubles to $500,000. Profits above these amounts are subject to the new 3.8% tax.
More Tax Facts for Chevy Chase Home Sellers
You will not pay the 3.8% at closing. Again, it has nothing to do with a home sale, other than it being your source of unearned income, as in the case of this example.
The 3.8% tax is effective in 2013. If you sell your Chevy Chase home during 2013 and realize capital gains beyond the excluded thresholds, these gains will be part of your income tax filing in 2014.
You can read more about how the 3.8% tax works by reading the “Top 10” outline on Realtor.org. Please see your professional tax preparer for more details. You can also read up on it at IRS.gov; scroll down to item #10 for real estate.
Selling Your Chevy Chase Home in 2013
There are many uncertainties in the real estate market, and there is only so much you can control. Instead of waiting and worrying, why not make your home selling plans now? As your experienced Chevy Chase real estate professional, I will help you with strategies tailored to your home and your selling goals. I have the proven methods to deliver results, no matter the market conditions.
Contact me today for your personal consultation!
Melinda Estridge
The Estridge Group-Long & Foster Real Estate, Inc.
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