In the last few months Information Central has been receiving some calls from members concerned over two different claims have been made about recently enacted or pending legislation that would impact home sales. Both are false.
The first says that the Energy bill currently making its way through the senate would require home energy audits prior to sales. This is false. The bill rather provides for some state-administered matching grants to homeowners who make energy efficiency improvements to their homes. The bill also mandates new construction to meet certain energy efficiency guidelines, but prohibits time of sale labeling. The legislation is currently pending in the senate.
Secondly, some claim that the recently passed healthcare bill includes a 3.8% transfer tax on the sale of all homes. This is also false. The new Medicare tax applies only to high income (those with incomes over $200,000 for individuals, or $250,000 for households that file taxes jointly) with ‘net investment income’. As the first $250,000 of any sale of a primary residence is automatically excluded ($500,ooo if filing jointly) from capital gains, the only people who might pay this new tax are the very wealthy who sell a property at an enormous profit. Factcheck gives examples of who might pay:
- A single executive making $210,000 a year who sells his $300,000 ski condo for a $50,000 profit. His tax on the sale of that vacation home would amount to $1,900, in addition to the capital gains tax he would have paid anyway.
- An “empty nester” couple with combined income of over $250,000 a year who sell their $1 million primary residence to move to smaller quarters. If they cleared $600,000 on the sale, they would be taxed on $100,000 of the profit (the amount over the half-million-dollar exclusion). Their health care tax on the sale would amount to $3,800 over and above the usual capital gains levy.
To help combat these false claims, NAR Government Affairs has created a handout [links to PDF]. Rest assured if there were any radical changes to the home buying and selling process, the National Association of REALTORS® would be on top of it, letting its members know the truth.