Lee Morof's Real Estate Blog

If you’re considering putting your Royal Oak Michigan home up for sale, you may have heard rumors  that there is a new tax going into effect in January, 2013. Here’s the rundown on what the tax really is – and isn’t.

The new tax is called the ‘‘Unearned Income Medicare Contribution.” It is a 3.8 percent tax on the net investment income of high-income taxpayers. The tax will apply to those with an adjusted gross income of more than $200,000 ($250,000 for joint filers), with no indexing for inflation.

The Good News
Odds are that you will never pay this tax.

Why You Most Likely Won’t Pay the New Tax
The tax will apply to capital gains, not sale proceeds. Because of the current exclusion of gains on home sales — up to $500,000 (joint) or $250,000 (single) on a primary residence — the vast majority of home sellers will not be required to pay this tax.

Here’s an example: A couple with an adjusted gross income of more than $250,000 (which qualifies them for the tax — more than 90% of households make less than that) decide to put their Royal Oak Michigan home up for sale. They purchased their home long, long ago for $50,000. They sell the house, miraculously, for $549,000. Because that profit of $499,000 is under the $500,000 profit exclusion amount allowed for couples, they owe no tax.

The Bottom Line
There are plenty of other taxes that are worth getting upset about; this isn’t one of them.

If you’re looking for more information on putting your Royal Oak Michigan home up for sale, I can help. Give me a call today at 248-514-2640 or email me at info@NorthWoodwardHomes.com.

Lee Morof
Associate Broker/Certified Distressed Property Expert/Attorney  Lee Morof
RE/MAX Showcase Homes, Birmingham, Michigan
www.NorthWoodwardHomes.com