วันพฤหัสบดีที่ 5 ตุลาคม พ.ศ. 2560

Beware of Obamacare When Selling Real Estate

When the Affordable Care Act was passed in 2010, Speaker of the House Nancy Pelosi said, "We have to pass the bill so that you can find out what is in it." Well, we are now finding out that what is in the bill has major negative consequences for anyone who intends to sell real estate they own.

One of the provisions of Obamacare is a 3.8 percent Medicare contribution tax imposed on the sale of real estate and other assets, like stocks, whichever is ทาวน์โฮมมือสอง ราคาถูก the lesser of an individual's net investment income for the tax year or their modified adjusted gross income in excess of $200,000 ($250,000 for married couples filing a joint return). Net investment income includes net rental income unless it is derived in the ordinary course of a trade or business, in which case, it is taxed at ordinary income tax rates.

Here's a quick and dirty example of the impact of the Medicare surtax hidden in Obamacare: Say you have a 100-unit apartment building you bought for $10 million and sold 10 years later for $13 million. Assuming 3 percent in selling costs, the overall gain on the sale would be $5,337,273 of which $2,727,270 would be attributable to depreciation recapture ($10,000,000 less land of $2,500,000 = $7,500,000 building / 27.5 years = $272,727 per year x 10 years = $2,727,270), and $2,610,000 would be attributable to actual gain on the sale.

Obamacare requires the payment of the Medicare surtax of 3.8 percent on all net investment income or modified adjusted gross income in excess of $250,000 (for married couples filing a joint return). That results in an additional tax on the sale of the property of $89,680 in excess of any taxes paid for depreciation recapture or actual gain on the sale.

Elections have consequences, and the Medicare surtax that arose because of the passage of Obamacare on the sale of all real estate investments is one of them. When Barack Obama told a crowd of cheering supporters that, "We are five days away from fundamentally transforming the United States of America," I don't think anyone imagined that his signature legislative achievement was going to directly impact everyone who owned investment properties and redistribute their hard-earned income to others.

I think those involved in the passage of Obamacare intended to redistribute property owners' income. Sixteen years ago, Obama spoke at a 1998 conference in Chicago and stated, "I think the trick is figuring out how do we structure government systems that pool resources and hence facilitate some redistribution because I actually believe in redistribution." Through the passage of Obamacare, the Medicare surtax on property is one way he has effectively restructured government systems to pool resources to facilitate some redistribution, and everyone should be aware of those consequences when selling real estate.


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