~by Rev. Linda Hanna Walling, Faithful Reform in Health Care
Truth is witness to the whole. One short sound-bite taken out of context — even if it’s a fact — does not necessarily represent the whole truth. We denounce the use of such sound-bites (from any party!) when they are intended to pervert truth for electoral gain. In the end, we acknowledge that a manipulation of facts to frighten and confuse vulnerable populations is just plain immoral.
Is there a new tax on home sales to help pay for health care reform?
Short answer: Beginning in 2013, there will be a 3.8% Medicare tax on the PROFIT in home sales for families making more than $250,000/year ($200,000/individuals). If the home is a primary residence, per existing law, the first $500,000/families ($250,000/individuals) in profit will be exempt from the tax. Most home sales will not be affected by this provision in the health care reform law.
Longer answer: The Patient Protection and Affordable Care Act, amended by the reconciliation act H.R. 4872, provides for a 3.8% Medicare tax on unearned/investment income starting in 2013 (section 1402, revised to 1411, on page 33) for families making more than $250,000 per year ($200,000 for individuals). Investment income includes profit on property sales.
A family that makes $250,000 ($200,000/individual) and sells a home for a profit will be required to pay a 3.8% tax on that profit (not on the sale price, only on the profit) as part of their capital gains taxes. However, if the home is a primary residence, per existing law, the first $500,000/families ($250,000/individuals) in profit will be exempt from the tax. It is estimated that only the highest earning 2% of families will be impacted by this provision.
Why the confusion? Another example of a fact taken out of context, this myth about the impact on all home sales seems to have started with a March 28, 2010, Op-Ed written by Paul Guppy for a Spokane, WA newspaper. The author is the Vice President for Research at the Washington (state) Policy Center, “an independent, non-partisan think tank promoting sound public policy based on free-market solutions.” The author’s claim was immediately refuted by the government affairs director of the local realtors’ association
For more information:
FactCheck.org provides a detailed analysis of this issue and numerous links to other sources of information.