Real Estate Tax in the Health bill

There has been an emailing going around about a 3.8% real estate tax-----I've been hearing about this on and off for about a year-----below is the best explanation I've been able to find. 

The explanation below comes from a Realtor in Illinois.  

So, not everybody who is selling a house needs to panic as it probably won't affect you, however, if I may inject my own political viewpoint----this is another TAX that is imposed.   Its supposed to apply only to the "rich".  I'm not rich by anyone's sense of the word, but if we keep penalizing people for being "rich" are we all going to strive to be "poor"?      So, if we don't have the "rich" folks around----who is going to hire me or you???



3.8% Real Estate Sales Tax - True or False?


You may have received an email or heard something on Twitter about the 3.8% real estate sales tax that has recently been brought up as an issue with the Health Care Bill (HR 3200). In the emails, the tax is railed against and brought up as an absolute for all Americans selling their homes.

But wait...maybe we should dig further. Is it true? Is it kind of true? Is it blatantly false? Does it lie somewhere in between? Seems this is just another case of email first, tell the truth later.

There is indeed a 3.8% tax in the Health Care Bill. It, however, is incorrectly labeled as a sales tax. It is called a Medicare tax in the legislation and I know we're splitting hairs here, but I think it's important to mention as the use of specific words like this are calculated and planned by people to manipulate people's emotions.

This tax however, does not single out real estate, rather it is a tax on investment income. The key to everything is how the numbers are calculated on whether or not the tax applies to you. The 3.8% Medicare tax is designed to only affect so-called "high earners" and not everyone will pay the tax upon the sale of their home.

The Tax Facts

•There is a new 3.8% tax in the bill.

•It is not a "sales tax" on all real estate transactions.

•It is a Medicare tax.

•Many people will not have to pay this tax.

•It is going to affect so-called "high earners."

•It is not going affect many people.

•The tax comes into effect in 2013.

"High Earners" - Who are they?

The income requirement for so-called "high earners" are spelled out in the new law: $250,000 for married couples filed jointly, $125,000 for couples filing separately, and $200,000 for all others. If you earn more than these benchmarks, you are a "high earner" and therefor subject to the new 3.8% tax, but what you are taxed on helps further eliminate many people.

How is the tax calculated?

One of the emails I've seen states that on the sale of a $400,000 home, you would pay $15,200 as a real estate sales tax (3.8% x $400,000). This is incorrect. There are two incorrect assumptions by the authors of the email; a) that the Medicare tax is based off of sales price alone and b) it applies to everyone (which we know to be false based on the "high earner" income requirement).

The incorrect assumption that the real estate sales tax (aka the Medicare tax) is calculated based on the sales price of the home makes a huge difference. Instead, the tax is calculated based on profit. As investment income, the profit is the sale price minus the initial investment. Going back to the $400,000 home mentioned earlier, let's assume you paid $350,000 for it. You profited $50,000. Based on that, your tax would be $1,900 (3.8% x $50,000). Much better than $15,200, right?

But wait, there's one more piece of the puzzle.

Okay, so you owe $1,900, which isn't that bad in the overall scheme of things. But wait...do you owe $1,900? The answer is a resounding no. Why? Because of the capital gains threshold that is included in the language. You are only charged the 3.8% Medicare tax if your investment income passes the capital gains threshold. How much is that? The capital gains threshold is $250,000 for individuals and $500,000 for married couples filing jointly.

This means that profit over the $500,000 or $250,000 (depending on your marital status) would be taxed at the 3.8% rate (you would still need to be classified a "high earner"). In our $400,000 example above, where you walked away with $50,000 in profit, you would not be taxed. The $50,000 is below the capital gains threshold.

Mary
850-896-5222
http://www.maryblackburn.com/
sundance realty

Some interesting Real Estate Facts

Fannie Mae conducted a telephone survey from December 2009-January 2010.   Some of the interesting results:

• 64% of the respondents think it is a good time to buy a house, however only  thirty one% think it is a VERY good time to buy.  ( I belive that most people are still a little, ok, very, worried about the future and they are not willing to take a lot of risk!)
• 73% think housing prices will go up or stay the same over the next year. 
• 70% said they believe buying a home continues to be one of the safest investments available. 
• 65% prefer owning to renting.
• The two most common reasons for choosing to rent instead of buy: belief their credit history is not good enough to qualify for a mortgage and they felt they would be unable to afford the purchase and upkeep. 

National Association of Realtors also came out with the national median sales price this week.

• The national median sales price is now $182,600
• In the northeast it is a whopping $263,800
• In the midwest:  $151,600
• In the south:  $156,300
• In the west:  $224,800

What is really interesting is that the median sales price for the Mexico Beach area for this year is $177,500. 

So for a median sales price of $177,500 you can have a home with just a few minutes walk to the most beautiful white sand beach or you perhaps you prefer to freeze in Chicago???

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I also believe it is a VERY good time to buy!

• Interest rates are still under 5%.
• The inventory in our neck of the woods has been significantly reduced, which is going to really affect the supply and demand theory.
• The prices may have plateaued--many of the properties listed at good prices are now getting multiple offers and sellers definitely have a bottom line!

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There are a few good deals left and I'm praying more will come on the market!  There are definitely buyers, in fact, more buyers than properties.    Most buyers are looking for move in ready.    Buyers who are willing to make repairs are out there as well, its just they are really expecting a much lower price!!!
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Please don't hesitate to call me anytime if you have questions about real estate in Mexico Beach, St. Joe Beach, or Port St. Joe!

What lies behind us, and what lies before us, are tiny matters compared to what lies within us.~Ralph Waldo Emerson

Mary
850-896-5222
maryblackburn@mchsi.com
http://www.maryblackburn.com/
sundance realty

Last Posting about the Oil Spill for Mexico Beach

Well, according to the State Department we are officially released from being in a State of Emergency.
See the press release below.

I know that we still have "workers" walking up and down the beaches looking for tar balls and such and we still have boats in the water although I'm not sure if they are actually monitoring the water off Mexico Beach or just in the Bay. 

Of course, if I hear of anything of importance I will relay it immediately!!!

Thanks to all of you who vacationed in Mexico Beach throughout this whole fiasco!!!!


FOR IMMEDIATE RELEASE: FRIDAY, AUGUST 27, 2010



CONTACT: PUBLIC INFORMATION (ESF 14): (850) 921-0217


STATE EMERGENCY OPERATIONS CENTER TRANSITIONS TO MONITORING STATUS FOR THE DEEPWATER HORIZON EVENT


TALLAHASSEE – The State Emergency Operations Center (EOC) transitioned today to a Level 3 monitoring status for the Deepwater Horizon event. State emergency response officials will continue to respond to impacts as they are reported to the State Watch Office and ensure proper cleanup occurs as needed.


“Though the State EOC activation has come to an end, the State Emergency Response Team remains committed to protecting Florida’s coastline from this disaster,” said David Halstead, director of the Florida Division of Emergency Management. “Our state has a robust system in place for responding to reports of oil product on our shores and we will continue to be vigilant in ensuring reported impacts are cleaned up immediately.”


The State EOC initially activated on April 30 in response to this event. Today marks day 120 of activation, which is the second longest activation in EOC history, behind the 137 day activation for the 1998 wildfire season.


As part of this transition, the Florida Oil Spill Information Line (FOSIL) will deactivate after today. Callers seeking state information regarding the oil spill should view the Deepwater Horizon Florida website at www.deepwaterhorizonflorida.com or call the BP Community Information Line at 1-866-448-5816 or the Gulf Coast Claim Facility at 1-800-916-4893.


The most recent seven days of oil impact reports received by the State Watch Office and any continuing impacts to Northwest Florida’s coastline as a result of the Deepwater Horizon oil spill will be posted on the Deepwater Horizon Florida website at the following link: http://www.dep.state.fl.us/deepwaterhorizon/impact.htm. Potential oil sightings should continue to be reported to the State Watch Office at 877-2-SAVEFL (877-272-8335) or by dialing #DEP from most cell phones.


It is likely that beaches in Northwest Florida will continue to receive isolated impacts, mainly scattered tar balls, in the coming months caused by natural tides and weather conditions. It is possible that immediately following any tropical activity, lingering ocean swells and higher tides could push offshore tar ball fields closer to the coast. State emergency management officials continue to coordinate with federal, state and local
partners to ensure that any further impacts to Florida’s coastline are removed quickly and efficiently.


State emergency response officials remain dedicated to protecting Florida’s beaches and the health and well-being of its residents, visitors and wildlife. Visit www.deepwaterhorizonflorida.com or follow www.twitter.com/FLDEPalert to learn more about Florida’s response to the Deepwater Horizon incident, find a listing of phone numbers, and more.



 

Happy September From Mexico Beach

We could not have asked for better weather!   It has been a simply gorgeous weekend at the beach!
It was great seeing everybody down for the last holiday weekend of the summer although I know many many people who will still be coming down every weekend no matter what the season!!!

As usual, I worked this weekend!  Absolutely not complaining because as I've said a zillion times before I LOVE MY JOB!

I had only one scheduled appointment but had lots of calls from people down for the long weekend deciding its time to get in to the game.  I ended up showing property all day long yesterday to several new customers!  

 If I've heard it once, I've heard it 10 times in the last couple of months "I've been looking for years and never thought I'd be able to finally afford a vacation place in Mexico Beach".
With prices down and interest rates at unbelievably low rates---they can finally realize their dream!!

As a matter of fact, we are struggling to find properties that meet all of our buyers needs.   Our inventory is down, so any property that is priced to sell-----is selling!

Price is determined by location and condition.  Unfortunately for sellers, if you've not lowered your price in the last 30 days, you probably need to! 

Back to interest rates:  15 year fixed rates are now 4% and less!!!!
                                  30 year fixed rates are 4.2 to 4.6%
                               
I've had a lot of folks ask if the banks are lending----the answer is resoundly yes!!    You need good credit and willing to put down 20% for a 2nd home. 

I sent out my newsletter last week.  I include specific information about what properties have sold, are under contract as well as what I consider to be the best deals.    If you are a new reader and want to receive my twice a month newsletter, just send me an email! 

Have a fantastic week and take the time to do something unexpected for somebody this week!
Mary
850-896-5222
http://www.maryblackburn.com/
maryblackburn@mchsi.com
sundance realty