Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

PolitiFact: A 3.8 percent 'sales tax' on real estate transactions for health care?

It's a chain e-mail that has been popping up in the PolitiFact inbox again and again lately, with readers asking the same question: "Can this possibly be true?"

The e-mail claims real estate transactions will be taxed to pay for the new health care law supported by President Barack Obama and other Democrats.

"Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home etc. When did this happen? It's in the health care bill. Just thought you should know. …

"The bulk of these new taxes don't kick in until 2013. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes."

The e-mail urges you to click to an April 2010 blog entry from the Republicans in Congress that makes a similar argument.

We've seen and ruled on this e-mail before, but because it continues to bubble up, we thought it would be useful to reiterate our earlier ruling: The chain e-mail and the blog post are deceptive.

Here's why:

Instead of being a sales tax on all real estate transactions, the 3.8 percent tax is actually a tax on investment income for the wealthy. It applies only to the investment income of single taxpayers who make more than $200,000 or couples who make more than $250,000. (We looked it up in Section 1402 of the Health Care and Education Reconciliation Act of 2010, titled "Unearned income Medicare contribution.")

Still, maybe empty-nesters are scared they will be hit with this tax if they sell their homes for more than $250,000. But that's not a likely scenario for most taxpayers, because there's a long-standing tax exemption on the profits from home sales.

To be hit with the new tax, you would have to clear more than $250,000 in profit off your home, which means at least $250,000 more than you paid for it. And the ceiling is even higher for a married couple. Married couples are not taxed on the first $500,000 of profit from home sales. Again, that's profit, not the sales price.

When we first reported on this e-mail last year, we rated it Pants on Fire, because it was written to deceive people into thinking that all home sales would be taxed. That wasn't the case then, and it's still not the case. Only high-earners will have to pay the tax, and then only if profits from the housing sale exceed the legal exemptions from taxes.

Yes, the health care law includes new taxes. But the taxes won't hit most retirees looking to downsize their homes, only those who are also among the nation's highest earners. Because it seems aimed at scaring older Americans, we rated the e-mail's claim Pants on Fire. Our rating stands.

For more rulings, go to PolitiFact.com.

PolitiFact: A 3.8 percent 'sales tax' on real estate transactions for health care? 02/02/11 [Last modified: Wednesday, February 2, 2011 9:22pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. World War II vet, 97, takes a knee in support of anthem protests

    Human Interest

    SPRINGFIELD, Mo. — On a day when NFL teams grabbed the nation's attention by coordinating demonstrations during the national anthem, a 97-year-old World War II veteran went viral with a solitary show of support for the protests.

    Brennan Gilmore posted a Twitter picture Sunday morning of his grandfather, John Middlemas, kneeling while wearing a veteran's cap. [Twitter]
  2. Florida education news: Shelter duty, charter schools, teacher pay and more

    Blogs

    ON THE JOB TRAINING: Michael Vasallo learns how to run an evacuation shelter on his 21st day as principal of Dunedin Highland Middle School.

    First year principal Michael Vasallo, right, got called into hurricane shelter duty one month into his job.
  3. Forecast: Sunny skies, warm temperatures to rule across Tampa Bay this week

    Weather

    After periods of heavy rain in some parts of Tampa Bay over the weekend, the region can expect sunny skies, and warm condition to prevail through the workweek.

    [10Weather WTSP]
  4. PolitiFact Florida: How would Florida fare in Graham-Cassidy health care bill?

    National

    Following a sharp rebuke by late-night talk show host Jimmy Kimmel, Sen. Bill Cassidy, R-La., hit the airwaves to defend his bill that would undo much of the Affordable Care Act.

    Sen. Bill Cassidy, R-La.
  5. Whatever happened to the Zika epidemic?

    Health

    Remember Zika?

    The last time Gov. Rick Scott warned Floridians about the potential threat of the mosquito-borne virus was in July, when he urged residents to still be vigilant against bug bites and standing water. At the time, doctors and researchers were bracing for what was supposed to be another active summer …

    Aedes aegypti mosquitoes are responsible for transmitting Zika. Cases of the virus are down dramatically in Florida.