As we look ahead to the new year, some vital changes will occur in our tax laws. For instance, one that will affect real estate is President Obama’s new Medicare Tax on unearned investment income on secondary properties. Those of us trying to sell a vacation or non-primary residence will definitely want to take a closer look at this change and make some quick decisions if contemplating on selling a secondary home.
The new tax structure, which goes into effect on January 1, 2013, may seem a little complicated, but in summary applies to the “unearned” income of “high income” tax payers. For example, those who file “single” returns will be subject to the new unearned income tax if they have an Adjusted Gross Income (AGI) of more than $200,000. Married couples filing jointly with an AGI of more than $250,000 will also be subject to the new tax.
You might ask why it’s called a Medicare tax? That’s because the revenues generated from the tax will be allocated to the Medicare Trust Fund that is part of our Social Security System. Jeff Quintin, who specializes in South Jersey real estate, does a superb job in summarizing the new tax initiative. Please refer to his video for specific examples by clicking here. Although Jeff feels strongly that the tax will indeed affect his marketplace, anyone thinking of selling a vacation home should absolutely watch his video and act quickly to avoid the possibility of an additional burden before the close of the year.
As always, my team and I are available to assist you in every way. Whether you are thinking of selling your secondary home, need to bounce off ideas or have specific questions, we are here to make your sales experience a pleasant and profitable one.
Look ahead and plan wisely to make the most out of your secondary home sale.