There is a story going around that there is a 3.8% federal tax on all real estate transactions in the current Medicare bill. That isn’t true. Well, not exactly.
There is no federal real estate tax. Period. However, there is a very small tax being levied on a very few wealthy people on their investment properties, among other things.
When it comes to rumors and urban myths, I’ve relied on Snopes.com for the straight story for nearly 20 years. They are the best debunkers in the world, even when it comes to my own profession.
Snopes.com says of this story, “…it is an investment income tax which could result in a very small percentage of home sellers paying additional taxes on home sales profits over a designated threshold amount.” The capital gains exclusion on principle residences still applies. This may apply to about 5% of taxpayers, and then if (and only if) they make a real estate transaction that triggers the tax.
And it doesn’t even kick in until 2013. And, according to some people, the world will have ended by then, anyway.