There seems to be a lot of buzz out there about the new health care bill coined "Obamacare". In it, there is a reference to a tax on home sales which has caused many people great distress, especially in Utah. Many blogs, newspapers, editorials, and more are incorrectly reporting this tax as acting like a "general sales tax" on real estate sales. This is not the case.
The current argument most commonly stated is that if a home is sold at $250,000, the owner/seller would be required to pay a 3.8% tax on this sale resulting in a $9,500 tax bill for the sale. This simply is not correct. In fact, most likely the "sales tax" liability on a home of $250,000 will be $0.
The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple, then you would be required to pay the additional 3.8% tax on any gain realized over this threshold.
Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, an important distinction.
If your home is an investment property and you do not qualify for the tax exemption, you may be able to defer the tax liability by performing a 1031 exchange when selling your property --something we have helped many investors do.
If you would like more information about the how to sale and perform a 1031 exchange please contact us. If you have any questions in regards to qualifying for the capital gains exemption threshold, consult with your accountant.