The Internet can be an invaluable source for information. Unfortunately, it can also be a great source of misinformation and “urban myths.” Below are two of the most common myths regarding real estate laws or pending legislation. If you have received either or both of these e-mails you are in good company; thousands of our members have sought verification from MAR or NAR on these chain e-mails. Both e-mails are inaccurate.
FEDERAL SALES TAXES ON HOMES?
Q. Is it true that a provision in the new federal health care law will put a new 4% tax on all home sales?
A. No. The following directly addresses the issue: An opinion piece in the Spokane, Wash., Spokesman-Review last month FALSELY reported that the health care bill contained a provision for a 4% “sales tax” or “transfer tax” on the sale of a home. This e-mail was and is inaccurate. The analysis by FACTCHECK.ORG: the Claim is False.
The health bill included a provision that imposes a new 3.8% Medicare tax for some highincome households that have “net investment income.” Any revenue collected by the tax is dedicated to the Medicare hospital insurance program. This new tax applies only to households with Adjusted Gross Income (AGI) of more than $200K for individuals or more than $250K for married couples. Since capital gains are included in the definition of net investment income, an additional tax obligation might result from the sale of real property. Even if the AGI limits are met, the new tax would not be applied to capital gains that result from the sale of a home, since the existing home sale capital gains exclusion rule still applies— $250K (individual)/$500K (couple). So if the gain from the sale of the primary residence is below that amount, then NO Medicare tax will have to be paid on the gain. The new Medicare tax would apply only to a home sale gain realized in excess of the $250K/$500K that pushes the filer’s AGI over the $200K/$250K income limits.
Some other quick points:
The new Medicare tax will take effect January 1, 2013.
The legislation makes no changes to the mortgage interest deduction.
FEDERAL "CAP AND TRADE" BILL AND MANDATORY ENERGY AUDITS?
Q. Is it true that the energy bill pending in Congress contains language that, if enacted, would mandate energy audits before any home can be sold?
A. No. The false e-mail was typically entitled, “Homeowners, Listen Up” or “License to Sell Your Home?” But no language mandating energy inspections and/or retrofits before a home is allowed to be sold exists in the bill as the e-mail claims. Here is what NAR has to say on the subject: Claim: Pending legislation in the Senate would require an energy license or retrofit for home sales. FALSE: There is no requirement in H.R. 2454, The American Clean Energy & Security Act, that home sellers obtain either a license or energy audit or make energy retrofits before they can sell their home. The legislation, passed earlier by the House, is pending in the Senate.
Stephen Ryan, Esq., MAR
General Counsel, addresses questions and issues raised on the Legal Hotline, available to designated Realtors® weekdays from 9 a.m. to 1 p.m. at 800-370-5342