Real Estate and the new Healthcare Bill – What you need to know.

There’s been some confusion about how the new health care bill may affect real estate.  First, there is no 4% “sales tax” or “transfer tax” on the sale of a home included in the health care bill.   Additionally, there is nothing in the bill that impacts the mortgage interest deduction.   What was included in the health bill is a provision that imposes a new 3.8% Medicare tax for some high income households that have “net investment income”.   Any revenue collected by the tax is dedicated to the Medicare hospital insurance program.

This new tax would only apply to households with Adjusted Gross Income (AGI) of more than $200,000 for individuals or more than $250,000 for married couples.  Since capital gains are included in the definition of net investment income, an additional tax obligation might result from the sale of real property.

The calculations of how much tax is owed are complex.   However, even when the AGI limits are met, the new tax would not be applied to all capital gains that result from the sale of a home since the existing home sale capital gains exclusion rule still applies.

So if the gain from the sale of the primary residence is below $250,000 (individual)/$500,000 (couple) then no Medicare tax will have to be paid on the gain. The new Medicare tax would only apply to any home sale gain realized in excess of the $250K/$500K existing primary home exclusion that pushes the filer’s AGI over the $200K/$250K income limits.

The new Medicare tax will take effect January 1, 2013.    Of course, you need to check with your own tax professional to see how the new health care reform bill can affect your bottom line.

For more information on real estate in Highlands, contact Judy Michaud at Meadows Mountain Realty 828-526-1717 or toll free 866-526-3558.    Please feel free to stop by our office at 450 N. 4th Street in Highlands or at 94-1 Highway 64 West in Cashiers.   Or visit us online at   We can also be reached by email at [email protected].

About the Author
BERKSHIRE HATHAWAY HOMESERVICES MEADOWS MOUNTAIN REALTY has been serving the Highlands NC and Cashiers NC areas offering exclusive mountain real estate and country club properties since 2003.

We recognize that there are many important aspects to consider in making a real estate choice. With that in mind, we listen closely to the needs and desires of each individual customer and work diligently to find the ideal mountain property or to sell your property as efficiently and effectively as possible. However, our job does not stop there.

Once you have made your real estate decisions, we are here to help you in any way that we can. It will be our pleasure to familiarize you with all aspects of the Highlands and Cashiers communities, including home, professional and personal services as well as activities, restaurants, health care and shopping. We will go the extra mile to ensure that your experience in the mountains exceeds your expectations.

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