Rumors keep surfacing about the 3.8% real estate transfer tax added to the health care bill. The National Association of Realtors has prepared information with scenarios and examples to explain exactly when and how this tax would apply.
The Impact of the Tax Cuts & Jobs Act on High Tax Bracket Individuals - Show ...gppcpa
Objective: To quantify the effects of the Tax Cuts & Jobs Act for taxpayers in the highest individual tax bracket; to quantify the effects of the increase in the lifetime estate and gift tax exemption for taxpayers at all levels of wealth; and to identify the challenges and opportunities available for taxpayers as a result of these changes.
The Impact of the Tax Cuts & Jobs Act on High Tax Bracket Individuals - Show ...gppcpa
Objective: To quantify the effects of the Tax Cuts & Jobs Act for taxpayers in the highest individual tax bracket; to quantify the effects of the increase in the lifetime estate and gift tax exemption for taxpayers at all levels of wealth; and to identify the challenges and opportunities available for taxpayers as a result of these changes.
Partnership Sale of Asset & Buy-out vs Redemption of Partner InterstWilliam Bryant
This is a Financial Model that illustrates the Tax Effect (current law) on the Sale of Depreciated Property owned by a Partnership. As well as to compare and contrast the Tax Effect of a departing partner if their partner interest was Buy-out vs Redemption of that Partner Interest.
Born of the need to create a perfectly dynamic system able to withstand the most creative of sales pitches thrown at it, this talk will be about what lead me onto the path of Mongo and then using it to create almost anything from 100s of Facebook applications to a social media sentiment ranking system used by some of the biggest companies in the world.
http://www.meetup.com/Meteor-Singapore/events/221025182/
Thinking Outside the Lines with #newliteracies (Santa Rosa Summit with EdTEch...Amy Burvall
How can we model and help our students develop skills in the new literacies of the digital world? In this workshop we explored the so-called "new" or "emerging" literacies - things like the nuances of hashtags and how to use them for creative production, video blogging as an effective alternative to the written essay, microcontent, and visual thinking and media.
***please note that the VIDEOS will not play in this version
See some of the vlogging videos in this community: https://plus.google.com/u/0/communities/115585487553081978789
Partnership Sale of Asset & Buy-out vs Redemption of Partner InterstWilliam Bryant
This is a Financial Model that illustrates the Tax Effect (current law) on the Sale of Depreciated Property owned by a Partnership. As well as to compare and contrast the Tax Effect of a departing partner if their partner interest was Buy-out vs Redemption of that Partner Interest.
Born of the need to create a perfectly dynamic system able to withstand the most creative of sales pitches thrown at it, this talk will be about what lead me onto the path of Mongo and then using it to create almost anything from 100s of Facebook applications to a social media sentiment ranking system used by some of the biggest companies in the world.
http://www.meetup.com/Meteor-Singapore/events/221025182/
Thinking Outside the Lines with #newliteracies (Santa Rosa Summit with EdTEch...Amy Burvall
How can we model and help our students develop skills in the new literacies of the digital world? In this workshop we explored the so-called "new" or "emerging" literacies - things like the nuances of hashtags and how to use them for creative production, video blogging as an effective alternative to the written essay, microcontent, and visual thinking and media.
***please note that the VIDEOS will not play in this version
See some of the vlogging videos in this community: https://plus.google.com/u/0/communities/115585487553081978789
Barauni Refinery is the second Public Sector Refinery of Indian Oil Corporation built in collaboration with erstwhile USSR and limited participation of Romania. It is located near the northern bank of river Ganga in Begusarai district of Bihar. The refinery went on stream in the year 1964 and was formally inaugurated by Prof. Humayun Kabir, the then Union Minister for Petroleum & Chemicals, Govt. of India on 15th January,1965.
“Semi-Flexible dense polymer brushes in flow – Simulation & Theory”,
Frank Römer and Dimitry A. Fedosov, A talk given at the Institute of Physical Chemistry in Cologne, June 2015
Updated - The Future of Automotive Data 25 07 16Future Agenda
In June 2015, as part of the core Future Agenda programme, we ran a dedicated workshop in Munich on the future of the connected vehicle, the stimulus for which can be found on our slideshare site (http://www.slideshare.net/futureagenda2/the-future-of-the-connected-vehicle-29-july-2015) while the outputs are on Flickr (https://www.flickr.com/photos/131046472@N07/albums/72157650615072522). With the connected car vision fast growing in impact and reach, many are highlighting what new data sources may be available in the future and how these may provide benefit to drivers, manufacturers and support services. As such we are now taking a deeper look at this, what is possible, what is probable and where value may be created, delivered and shared.
Building on last year’s views and additional recent discussions, we created a new initial view that brought together a number of different perspectives on the potential future of automotive data, the varied sources potential shifts within the sector as well as adjacent trends on data and connectivity. Over the past couple of months we gained feedback and opinion from around the world on which of these shifts are most likely to occur, where greatest value lies and what may be missing from this view.
As many organisations are rushing to grab as much data as possible, many hoping to extract value from the associated insights, we hope that this discussion will help clarify the reality from the hype, prioritise the propositions that will truly have benefit and so enable more focused activities. This is an area where collaboration, data sharing and competitor cooperation is clearly critical and as a lead arena for digital transformation we hope that the associated insights that emerge will be of interest to many.
This is an update of the initial view that includes comments from multiple experts around the world with whom we have talked. Some are from within the automotive sector and others from adjacent fields - potential partners and disrupters. We have grouped the updated insights into clusters around potential pots of value as seen by these experts - and separated them into level of value (high / medium / low etc) and level of sharing of data - from proprietary to shared to open.
As the final stage of this project we are now opening this up for wider comment to build a more broadly informed point of view. We welcome your views
With content from the National Association of REALTORS®, VAR has put together a simple PPT presentation to allow brokers to explain to agents the myths and realities of the 3.8% 'real estate' tax.
With the elimination of the personal exemption in 2018, some large families could experience increased state-level taxes. In states where families trend to larger sizes, such as Utah, the State Tax Commission anticipates tens-of-millions in surplus revenues as a result of the personal exemption elimination.
Section 199A of the Internal Revenue Code provides many taxpayers a deduction for qualified business income from a qualified trade or business operated directly or through a pass-through entity.
http://bit.ly/Harshwal
Lixin Azarmehr, a Los Angeles-based real estate development trailblazer, co-founded JL Real Estate Development (JL RED) in 2015 and serves as its CEO. Her expertise has propelled the firm to specialize in luxury residential and mixed-use commercial projects, with a portfolio that features upscale retail spaces and sophisticated care facilities.
Elegant Evergreen Homes - Luxury Apartments Redefining Comfort in Yelahanka, ...JagadishKR1
Experience unmatched luxury at Elegant Evergreen Homes, offering exquisite 2, 3, and 4 BHK apartments in the serene locality of Yelahanka, Bangalore. These meticulously crafted homes blend modern design with timeless elegance, providing a harmonious living environment. Enjoy top-tier amenities and a prime location, making Elegant Evergreen Homes the ideal choice for discerning homeowners.
Avrupa Konutlari Yenimahalle - Listing TurkeyListing Turkey
Welcome to Avrupa Konutları Yenimahalle, where luxury living meets unparalleled convenience in the heart of Istanbul. Developed by Artaş Holding, one of Turkey’s leading construction companies, this prestigious residential project offers a contemporary lifestyle experience like no other.
https://listingturkey.com/property/avrupa-konutlari-yenimahalle/
Omaxe Sports City Dwarka stands out as a premier residential and recreational destination, offering a blend of luxury and sports-centric living. Located in the thriving area of Dwarka, this project by Omaxe Limited is designed to cater to modern lifestyle needs while promoting a healthy, active living environment.
Green Homes, Islamabad Presentation .pdfticktoktips
Green Homes Islamabad offers beautifully designed 5, 8, and 10 Marla homes near the airport and motorway. Enjoy luxury, convenience, and high rental returns in a prime location.
Investing In The US As A Canadian… And How To Do It RIGHT!! (feat. Erwin Szet...Volition Properties
=== Investing In The US As A Canadian… And How To Do It RIGHT!! (feat. Erwin Szeto) ===
Ever been curious about Real Estate Investing in the US?? At Volition, for the past 14 years, we have been focused on helping investors invest in over $250M of real estate and generate $100M of wealth in the Toronto market, but we are always open to learning more about other business models and learning from other investors.
The US has always been an intriguing market to invest in. But the US is a big place… if you’re interested in investing in the US, you probably have a lot of questions, like:
☑️ Specifically WHERE should you invest?
☑️ What are the best markets to invest in and why?
☑️ How much are property prices there?
☑️ What are the returns like?
☑️ What is cashflow like?
☑️ Compared to investing in Toronto or other cities in Ontario, what are the benefits / tradeoffs?
☑️ What ownership structure should I use?
☑️ What are the tax implications?
☑️ Can I get financing?
☑️ What are tenants like?
Enter Erwin Szeto, a longtime friend of Volition. Since 2005, Erwin Szeto and his team have navigated the challenging landscape of being landlords in Ontario. Now, they are shifting their focus and guiding their clients' investments toward the more landlord-friendly environment of the USA. This decision comes after assisting Canadian clients in transacting over $440,000,000 in income properties. Faced with issues like affordability constraints, tenant-friendly laws, rent control, and rental licensing in Canada, Erwin sees a clear opportunity in the U.S. Here, there is a significant influx of investments leading to the creation of high-paying manufacturing jobs. Erwin and his clients are poised to capitalize on these opportunities where landlord rights are stronger and there is no rent control.
To facilitate this transition, Erwin has partnered with and become a client of SHARE, a one-stop-shop U.S. Asset Manager. Founded by Canadians for Canadians, SHARE enables as passive an ownership experience as possible for landlords in the U.S., while still maintaining direct, 100% ownership.
Erwin is “Making Real Estate Investing Great Again”!!
Website: https://www.infinitywealth.ca/
Facebook: https://www.facebook.com/iwinrealestate and https://www.facebook.com/ErwinSzetoOfficial
Podcast: https://www.truthaboutrealestateinvesting.ca/
Instagram: https://www.instagram.com/iwinrealestate/ and https://www.instagram.com/erwinszeto/
Referans Bahcesehir which is being constructed, in the center of the most regional destination as Bahçeşehir, shines out with its central location and unique landscape including social facilities such as a fitness center, sauna, sports facilities, children’s playground and recreational areas.
Not only drawing attention for immediate surroundings including commercial centers and private schools but also providing the easily accessible location with closeness to Tem Highway and connection roads, ongoing construction of 3rd Bridge Connection roads and Metro Projects
Bahcesehir is a rising value in the great city of Istanbul… Located at a new transportation junction in the northwest of the City… Located at such a spot that the access roads for the 3rd bridge and for the 3rd Airport will reach the region in 2016. The Marmaray and the Subway will extend all the way to Referans Bahcesehir respectively in 2018 and 2019.
465 flats and 34 stores are designed with an outstanding approach and arranged with a unique perspective offering the following options: 1 plus 1, 2 plus 1, 3 plus 1, 3.5 plus 1, 4 plus 1, and 4.5 plus 1. It is planned so as to safeguard you and your loved ones based upon a modern, technological safety approach. As you experience the joy and luxury here, you will be content and feet at ease.
It is worth seeing both inside and outside with heart-warming cafes, tasty restaurants and elegant stores… And it is ready to offer a vivacious social life with a warm and cozy space design.
A folding swimming pool and indoor swimming pools, playgrounds, Turkish bath, sauna… It has them all. Everything you need for your well-being and for having a pleasant time will be at your service. You simply need to align the rhythm of life with the rhythm of Referans Bahcesehir.
https://listingturkey.com/property/referans-bahcesehir/
Brigade Insignia offers meticulously designed apartments with modern architecture and premium finishes. The project features spacious 3,3.5,4 and 5 BHK units, each thoughtfully planned to provide maximum comfort, natural light, and ventilation.
https://www.newprojectbangalore.com/brigade-insignia-yelahanka-bangalore.html
One FNG by Group 108 Sector 142 Noida Construction UpdateOne FNG
One FNG by Group 108 is launching a new commercial project in Sector 142 Noida. Office space and high street retail shops on the FNG and Noida Expressway. For more information visit the website https://www.onefng.com/
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus o...Joseph Lewis Aguirre
Presentation to Windust Meadows HOA Board of Directors June 4, 2024: Focus on Public Safety as Job #1, Engagement, Wealth of HOA, Branding, Communication, Culture, Civic Responsibility
Oeiras Tech City, Developed by RE Capital and REIG, Will Become Lisbon's Futu...Newman George Leech
Oeiras Tech City, a historic development in the Oeiras municipality of Lisbon, is acquired by RE Capital and REIG. It is located on a 93,000-square-meter plot of land and combines co-living, business, and residential areas. It highlights ESG principles and is close to Tagus Park, which improves the urban landscape of Lisbon.
Rixos Tersane Istanbul Residences Brochure_May2024_ENG.pdfListing Turkey
Tersane Suites Residences is a luxurious real estate project located in the heart of Istanbul, next to the beautiful Golden Horn. This unique development offers hotel concept residences with Rixos management, making it the perfect choice for both homeowners and investors.
The Tersane Suites Residences offers a wide range of options, from studio apartments to spacious four-bedroom units, all designed to the highest standard. The suites are finished with high-quality materials and feature modern, open-plan living spaces, fully-equipped kitchens, and large balconies with stunning views of the city and sea.
One of the standout features of Tersane Suites Residences is the Rixos management, which provides a truly exclusive and upscale living experience. Residents will have access to a range of luxury amenities, including a fitness center, spa, and indoor and outdoor swimming pools. Plus, the on-site restaurants and cafes provide a taste of the local and international cuisine.
The Tersane Suites Residences also offers a great opportunity for investors, as it provides a rental guarantee program. This means that investors can enjoy a steady income stream, with the peace of mind that their property is being managed by a reputable and experienced team.
The location of Tersane Suites Residences is also unbeatable, with easy access to the city’s main transportation links and within close proximity to the historic center, making it the perfect base for exploring all that Istanbul has to offer.
Urbanrise Paradise on Earth - Unveiling Unprecedented Luxury in Exquisite Vil...JagadishKR1
Immerse yourself in the epitome of luxury living at Urbanrise Paradise on Earth. These opulent 4 BHK villas, nestled off the prestigious Kanakapura Road in Bangalore, redefine elegance and sophistication. With meticulous craftsmanship, breathtaking design, and unparalleled amenities, Urbanrise Paradise on Earth offers a sanctuary where every moment is infused with luxury and serenity. Experience a life of grandeur and indulgence at this exclusive residential enclave.
The SVN® organization shares a portion of their new weekly listings via their SVN Live® Weekly Property Broadcast. Visit https://svn.com/svn-live/ if you would like to attend our weekly call, which we open up to the brokerage community.
Keep Your Home Naturally Cool and Warm Out Change in Seasons
Vinra Construction is a private limited company registered under the ROC. The management has an experience of over 15 years of understanding the needs and delivering apt solutions to the end users We are providing turnkey solutions in construction fields. like Construction, Interior Designing Facility Management, Plantation Management, etc..
Vinra Construction Tech Enabled Company for Eco-Friendly Home Construction
Contact With Vinra for a Greener Future >>> Call us @ 888 4898 765
Simpolo Tiles & Bathware
Tile ho,
toh Simpolo.
Since the first steps were taken in 1977, Simpolo Ceramics has carved its niche as a consistently growing organisation with unparalleled innovation and passion rooted in simplicity.
We endure gratification for every experience we offer, created to share something meaningful. It may not resonate with the majority, but that makes us a class apart. If only a handful were to understand the purpose of our existence, we would be proud to have found our believers. Rather, people with whom we can share our beliefs.
VISUALIZER
Design your space in your style with our very own Visualizer. Now, you can choose the tiles of your liking from our wide selection and see how they would look in a space. Select the tile from the multiple options and the visualiser will replace the surfaces in the image with the selected tiles. This way, instead of just your imagination, you can choose the tiles for your place by getting an actual picture of how they would look in a space. So, design your space the way you desire digitally and implement it in real life to get the best results!
You can also share this visualiser with others to help them design their space.
Committed to delighting customers with world-class ceramic products and services. Make Simpolo synonymous with the best quality and set new benchmarks of excellence for all stakeholders. Pursue best business practices with utmost integrity to make Simpolo an exciting organisation to work with, for vendors, channel partners, investors and employees alike.
Gain worldwide recognition in the field of ceramic building products through Research and Innovation and bring an enhanced lifestyle within reach for every household.
Torun Center Residences Istanbul - Listing TurkeyListing Turkey
THERE IS LIFE IN ITS CENTER!
The most energetic spot of the city that will add utterly different pleasures to your life, with a park that will make Istanbul breathe, delighting indoor and outdoor bistros, cafes, restaurants, the brand-new Food Hall concept, where dozens of unique tastes are served together, market area, cinema, theater, fitness club, SPA and event venue...
All the pleasures that will enrich your lives are awaiting you on the most beautiful side of the city, at Torun Center Residences. In Mecidiyeköy, where the heart of Istanbul beats, business, life and entertainment opportunities are located at the exact center, at Torun Center, the most beautiful side of the city.
Penthouse apartments and different styles of flats from 1 + 1 to 4 + 1, from 100 to 425 square meters in a 42-story residence tower, have been designed for those who want to live in the center of magnificence. Torun Center is the redefinition of a better life with specially landscaped floor gardens, apartment options with private balconies, and automatic glass systems equipped with Trickle Ventilation that offers clean air comfort.
Business and life in the same place
Excellent service
Torun Center has many delightful details, from a swimming pool to sunbathing and resting terrace. With 24/7 concierge services, 24/7 security, valet, technical service, closed-circuit camera system (CCTV), central heating and cooling system, it makes your life easier.
Delightful details
The two-story Torun Center Lounge, with its indoor and outdoor seating areas, children's playroom, private dining and TV lounge, promises unforgettable memories to you and your loved ones with its unique Istanbul view.
Neighboring to the most pleasant square of Istanbul
A few steps from the Torun Center Residences, you can reach the city's most modern city square and open the doors of a quality city life. Torun Center Residences brings together on the same project the long-awaited city life for Istanbul and gourmet restaurants, cafes, gym and SPA, and state-of-the-art cinema and Artı Stage, hosting the most famous plays of the season.
Located at the intersection of alternative public transportation options such as the metro and Metrobus, Torun Center comes to the fore as the most accessible office for both sides of Istanbul. With a central location and rich transportation lines, Torun Center offices make life easier for employees and increase productivity.
MC Heights-Best Construction Company in jhanglaraibfatim009
MC Heights stands as the epitome of excellence in construction within Jhang. With a commitment to unparalleled quality and innovative design, MC Heights redefines urban living in the heart of Jhang. Offering luxurious residential spaces, cutting-edge commercial complexes, and vibrant community areas, MC Heights caters to the diverse needs of modern lifestyles. Our dedication to superior craftsmanship and customer satisfaction ensures that every aspect of MC Heights exceeds expectations, making it the premier choice for those seeking unparalleled sophistication and comfort in Jhang.
1. ★★★★★★★★★
The 3.8% Tax
Real Estate Scenarios & Examples
Effective January 1, 2013
2. Intro
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 for REALTORS® to clearly understand the tax and how it could impact
your clients. It’s a complicated tax, so you won’t be able to predict how it will
affect every buyer or seller.
To get you up to speed about this new tax legislation, the NATIONAL
ASSOCIATION OF REALTORS® has developed this 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 your clients.
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.
★
3. New Tax Rate:
Applies to: Individuals with adjusted gross income (AGI) above $200,000
Couples filing a joint return with more than $250,000 AGI
Types of Income: Interest, dividends, rents (less expenses), capital gains
(less capital losses)
Formula: The new tax applies to the LESSER of
Investment income amount
Excess of AGI over the $200,000
or $250,000 amount
★
4. Example 1
Capital Gain: Sale of a Principal Residence
John and Mary sold their principal residence and realized a gain of $525,000.
They have $325,000 Adjusted Gross Income (before adding taxable gain).
The tax applies as follows:
AGI Before Taxable Gain $325,000
Gain on Sale of Residence $525,000
Taxable Gain (Added to AGI) $25,000 ($525,000 – $500,000)
New AGI $350,000 ($325,000 + $25,000 taxable gain)
Excess of AGI over $250,000 $100,000 ($350,000 – $250,000)
Lesser Amount (Taxable) $25,000 (Taxable gain)
Tax Due $950 ($25,000 x 0.038)
NOTE: If John and Mary had a gain of less than $500,000 on the sale of their residence,
none of that gain would be subject to the 3.8% tax. Whether they paid the 3.8% tax
would depend on the other components of their $325,000 AGI.
Example 2
Capital Gain: Sale of a Non-Real Estate Asset
Barry and Michelle inherited stocks and bonds that they have decided to liquidate. The sale
of these assets generates a capital gain of $120,000. Their AGI before the gain is $140,000.
The tax applies as follows:
AGI Before Capital Gain $140,000
Gain on Sale of Stocks and Bonds $120,000
New AGI $260,000
Excess of AGI over $250,000 $10,000 ($260,000 – $250,000)
Lesser Amount (Taxable) $10,000 (AGI excess)
Tax Due $380 ($10,000 x 0.038)
NOTE: In this example, only $10,000 of their capital gain is subject to the 3.8% tax.
If their gain had been smaller (less than $110,000), they would not pay the 3.8%
tax because their AGI would be less than $250,000.
★
5. Example 3
Capital Gains, Interest and Dividends: Securities
Harry and Sally have substantial income from their securities investments. Their AGI before
including that income is $190,000. Their investment income is listed below.
The tax applies as follows:
Interest Income (Bonds, CDs) $60,000
Dividend Income $75,000
Capital Gains $10,000
Total Investment Income $145,000
New AGI $335,000 ($190,000 + $145,000)
Excess of AGI over $250,000 $85,000 ($335,000 – $250,000)
Lesser Amount (Taxable) $85,000 (AGI excess)
Tax Due $3,230 ($85,000 x 0.038)
Example 4
Rental Income: Income Sources Including Real Estate Investment Income
Hank has a “day job” from which he earns $85,000 a year. He owns several small apartment
units and receives gross rents of $130,000. He also has expenses related to that income.
The tax applies as follows:
AGI Before Rents $85,000
Gross Rents $130,000
Expenses (Including depreciation and debt service) $110,000
Net Rents $20,000
New AGI $105,000 ($85,000 + net rents)
Excess of AGI over $200,000 $0
Lesser Amount (Taxable) $0
Tax Due $0
NOTE: Even though Hank’s combined gross rents and day job earnings exceed $200,000,
he will not be subject to the 3.8% tax because investment income includes NET,
not gross, rents.
★
6. Example 5
Rental Income: Rental Income as Sole Source of Earnings –
Real Estate Trade or Business
Henrietta’s sole livelihood is derived from owning and operating commercial buildings. Thus, these assets
are treated as business property and not as investment property. Her income stream is outlined below.
The tax applies as follows:
Gross Rents $750,000
Expenses (Including depreciation and debt service) $520,000
Net Rents $230,000
New AGI (Net rental income) $230,000
Excess of AGI over $200,000 $30,000
Lesser Amount (Taxable) $0 (No investment income)
Tax Due $0
Henrietta’s rental income is from a trade or business so it is NOT treated as investment income.
Thus, she is NOT subject to the 3.8% investment income tax.
NOTE: The health care bill created a separate tax for high wage and self-employment
business income. Thus, Henrietta IS subject to the new 0.9% (0.009) tax on earned
income, because some portion of the net rents represents her compensation for
operating the commercial buildings. See additional background below.
For this example, assume that the total net rents are her sole compensation. The tax
on this earned income would be as follows:
AGI $230,000
Excess of AGI over $200,000 $30,000
Tax Due $270 ($30,000 x .009)
NOTE: Depending on how Henrietta has organized her business (S Corp, LLC or sole propri-
etor), she might be able, for example, to pay herself $175,000, leaving the remaining
$55,000 in the business in anticipation of making improvements the following year.
In that case, because her AGI of $175,000 is less than $200,000, she will owe neither
the unearned income tax (3.8%) nor the earned income tax (0.9%).
★
7. Example 6
Sale of a Second Home with No Rental Use (or no more than 14 days rental)
The Bridgers own a vacation home that they purchased for $275,000. They have never rented it to others.
They sell it for $335,000. In the year of sale they also have earned income from other sources of $225,000.
The tax applies as follows:
Gain on Sale of Vacation Home $60,000 ($335,000 – $275,000)
Income from Other Sources $225,000
New AGI $285,000 ($60,000 + $225,000)
Excess of AGI over $250,000 $35,000 ($285,000 – $250,000)
Capital Gain $60,000
Lesser Amount (Taxable) $35,000 (AGI excess)
Tax Due $1,330 ($35,000 x 0.038)
NOTE: If the Bridgers rent the home for 14 or fewer days in the course of a year, the rental
income is non-taxable and the results in the year of sale will be the same as shown
above. If the rental period exceeds 14 days in any year, then the rental income
(less expenses) will be taxable and AGI would include not only the capital gain,
but also some amount that is depreciation recapture. (See next example.)
NOTE: If the second residence is SOLELY a rental property, it is treated as an investment
property. See examples 7 and 8.
★
8. Example 7
Sale of an Inherited Investment Property (Residential or Commercial)
In 2010, Ethan inherited a four-plex investment property from his great aunt. She had used it for
many years as an investment rental property in San Francisco. At the time of her death, the adjusted
basis of the property was $10,000. During her period of ownership, she had taken $240,000 of
depreciation deductions on it. Its fair market value was $900,000 when she died. Because there was
no estate tax for 2010 and because carryover basis was in effect, Ethan’s basis in the inherited property
is also $10,000. The prior depreciation allowances carry over to him, as well. He continues to use
the property as an investment rental property.
Ethan later sells the property for $1.2 million. He is single and reports Schedule C self-employment
income of $180,000.
The tax applies as follows:
Gain on Sale $1,190,000 ($1.2 million – $10,000)
Depreciation Recapture $240,000 (From great aunt)
Depreciation Recapture $2,200 (Ethan — approximate)
Total Gain $1,432,200 ($1.19 million + total depreciation recapture)
Schedule C Income $180,000
New AGI $1,612,200 (Gain + Schedule C)
Excess over $200,000 $1,412,200
Lesser Amount (Taxable) $1,412,200 (AGI excess)
Tax Due $53,664 ($1,412,200 x 0.038)
NOTE: If Ethan had inherited the property in a year when stepped-up basis was in effect,
his basis would have been $900,000. The capital gain in this example would have
been only $300,000. Ethan would not have been responsible for his great aunt’s
depreciation recapture amount. His own depreciation recapture amount would have
been based on depreciation allowances claimed on a basis of $900,000 rather than
$10,000. Thus, while he would still have been liable for the 3.8% tax, the amount of
tax would be substantially smaller.
★
9. Example 8
Purchase and Sale of Investment Property (Residential or Commercial)
Ethan has purchased an investment property for $900,000. During his period of ownership, he takes
$230,000 in depreciation deductions. He has also made some improvements to the property. At the time
of sale, his adjusted basis in the property is $760,000. He subsequently sells the property for $1.2 million.
In the year of sale, he is single and reports self-employment income of $315,000.
The tax applies as follows:
Gain on Sale $440,000 ($1.2 million less adjusted basis of $760,000)
Depreciation Recapture $230,000
Total Gain $670,000 (Gain on sale plus depreciation recapture)
Schedule C Income $315,000
New AGI $985,000 ($315,000 + $670,000)
Excess AGI over $200,000 $785,000 ($985,000 – $200,000)
Lesser Amount (Taxable) $670,000 (Capital gain)
Tax Due $25,460 ($670,000 x 0.038)
NOTE: The statute provides no guidance as to whether Ethan can defer the 3.8% tax by
entering into a like-kind exchange when he sells the property. This question may be
addressed in regulations at a later time, but for the present is not resolved.
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10. Additional Info
This new tax was never introduced, discussed or reviewed until just hours before the final debate on the
massive health care legislation began. That legislation was enacted on March 23, 2010, more than a year
after the health care debate began. This new tax was put forward after Congress was unable to agree on
changes to current law that were sufficient to pay for the proposed changes to the Medicare program and
increased subsidies to individuals and businesses.
The new tax raises more than $210 billion (over 10 years), representing more than half of the total new
expenditures in the health care reform package. NAR expressed its strongest possible objections, but the
legislation passed on a largely party line vote.
The new tax is sometimes called a “Medicare tax” because the proceeds from it are to be dedicated to the
Medicare Trust Fund. That Fund will run dry in only a few more years, so this tax is a means of extending
its life.
A second new tax, also dedicated to Medicare funding, is imposed on the so-called “earned” income of
higher income individuals. This earned income tax has a much lower rate of 0.9% (0.009). Like the tax
described in this brochure, this additional or alternative tax is based on adjusted gross income thresholds
of $200,000 for an individual and $250,000 on a joint return. Like the 3.8% tax, this 0.9% tax is imposed
only on the excess of earned income above the threshold amounts. An example and some analysis of this
tax is presented in Example 5 of this brochure.
Another way of thinking about these new taxes is to think of the 3.8% tax as being imposed on a portion
of the money that you make on your money — your capital (sometimes referred to as “unearned income”).
The 0.9% tax is imposed on a portion of the money you make on your labor — your salary, wages,
commission and similar income related to earning a livelihood.
Online FAQs
www.REALTOR.org/healthreform
These FAQs can answer most of the questions not covered in these examples.
No separate brochure has been prepared on the 0.9% tax, as it has none of
the complexity associated with the 3.8% tax.
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11. LEARN MORE ABOUT GOVERNMENT AFFAIRS:
WWW.REALTOR.ORG/GOVERNMENT_AFFAIRS
ACCESS INFORMATION ON CURRENT INITIATIVES