Costa Mesa Real Estate Tax- The One Question Everyone Has Been Asking
I’ve heard this over and over lately- The Obama Healthcare Reform (Summary Here) that was passed includes a 3.8% sales tax on Costa Mesa homeowners who sell their home. Is it true? It’s been widely and erroneously circulated in e-mails and been the debate of many of my own agents around the water cooler recently.
Yesterday I recieved communcation from the President of the California Association of Realtors, Beth Peerce. The Association’s job, among other things, is to represent Realtors in Washington and Sacramento to stand up for our Costa Mesa real estate issues that we face on a day to day basis. Beth returned from meetings, and her answer to the burning question is this:
“Lately, I’ve been hearing from clients and many of you about the misinformation that has been circulating on the Internet and in e-mails that the healthcare reform bill passed last year includes a sales tax on real estate. This is false information, and I’d like to clarify the issue. The new law imposes a 3.8 percent tax for households in the top tax brackets on “unearned income.” This includes capital gains. However, this will not impact the exclusion on capital gains earned from the sale of a primary residence up to $250,000 for individuals and up to $500,000 for married couples. The 3.8 percent burden only applies to capital gains above the normal exclusion. A typical home sale will not incur any tax, and for the vast majority, the 3.8 percent tax won’t apply.”
This was also reported in the Washington Post about 6 months ago. It has just become internet rumor.
So let’s break down that Costa Mesa Real Estate Tax for homeowners:
Let’s say you sell your house for $750,000. Perhaps you bought this house way back in 1995 for $340,000 and you are a married couple.
How does the Obama plan apply here?
Sale price: $750,000
Original Purchase Price: $340,000
= $410,000 Gain/Profit from sale (not including fees, etc)
=100% gain on your real estate as a married couple without the Obama plan kicking in. Of course, I am not an accountant and this should not be construed or replaced by a CPA’s advice, but the basics here are true. Contact your local CPA for all of the current details, but as of this writing, most Costa Mesa real estate residents will not suffer the burden of this legislation.
Need help with your Costa Mesa real estate or other real estate questions? Call Broker Colin Delaney at 714-743-9882.