That 3.8% Tax On Homes In The Health Bill….

 Many have asked questions about a possible 3.8% tax which will be put on home sales beginning in 2013.  So hopefully this will help  clarify this situation for everyone. I am not an accountant and give you this information just as a simple answer to the misconception. Understand that, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.

A little history on the confusion

Fact Check.org explains it this way:

The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on “net gain … attributable to the disposition of property.” That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is “taken into account in computing taxable income” under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)

The Joint Committee on Taxation, the group of nonpartisan tax experts that Congress relies on to analyze tax proposals, underscores this in a footnote on page 135 of its report on the bill. The note states: “Gross income does not include … excluded gain from the sale of a principal residence.”

And just to be sure, we checked with William Ahern, director of policy and communications for the nonprofit, pro-business Tax Foundation. “Some home sales would see a tax increase under this bill,” Ahern told us, “but it would have to be a second home or a principal residence generating [a gain of] more than $250,000 ($500,000 for a couple).”

Simple Explanation: 

The following simple explanation comes from midiShaw:

The tax will affect those sellers of real property who will be otherwise taxed on capital gains under current tax laws. Under current laws, if you sell your primary residence and meet the ‘time ‘ criteria, you are exempt up to $250,000 or $500,000 (filing individually or jointly).  Any amount realized OVER that amount is taxable under current tax schedules based on income.  As such, this new tax will apparently be added to the current capital gains tax burden IF your income is over $200,000/$250,000 (filing individually or jointly). For those selling second homes and investment properties, the tax, once again, will be applied to the amount of gain realized.

Detailed Explanation:

The following also comes from midiShaw in a comment to the above answer.

Beginning in 2013, the national health care reform legislation that became law in March, 2010, imposes a new 3.8 percent tax on certain investment income. The new tax will apply to single filers with incomes over $200,000 and married taxpayers with incomes over $250,000. Under the law, the investment tax provisions in Chapter 2A of the Internal Revenue Code are placed under the heading “Unearned Income Medicare Contribution.” In general, this new Medicare tax will apply to investment income that is subject to income tax, which includes capital gains. Pursuant to IRC Section 1402 (C)(1)(A)(iii), the investment income to which this new tax applies includes “net gain” (to the extent taken into account in computing taxable income) attributed to the disposition of property that qualifies as a capital asset under Section 1221 (capital gains), as well as gains on other property that are considered part of ordinary income.

  This is just an explanation. Remember, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.

 

 

 

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SOFITEL LUXURY HOTEL – 45 W. 44th St New York, NY 10036

I had my first experience visiting the Big City a few weeks ago.  My daughter and I went for my birthday.  We happen to be there when it snowed in October for the first time since the Civil War.  That was pretty cool, but much colder than we had planned.

When booking my trip I asked friends, family and anyone that wanted to help me pick a place to stay.  I wanted to be close to everything , if possible and I was with my daughter so wanted to feel comfortable and safe.  I got many requests and suggestions.

The one that seemed to fit my needs was the Sofitel Hotel and it wasn’t much more than some of the others.  Well I just have to say, I have stayed at many hotels and by far this hotel topped the list.  The bed and pillows were like clouds.  The service and staff were more than courteous.  Yes I know this is their job but it was over and above.

I will be visiting the city more often now that I have seen what I’ve been missing all these years.  And I will be staying at the Sofitel Hotel. 

Just wanted to share.  I know there are a lot of great hotels in New York City but this one has got to be on the very top.  Check it out if you are planning a trip to the Big City.

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And Your Not Buying…Why….

“The point is not to pay Back Kindness….But to Pass it on.”   Julia Alvarez

 

Here are Four Resources to Buy Now!!

Forbes Magazine The next Mortgage Crisis

Wall Street Journal – It’s Time to Buy that House

MarketWatch.com –Now Might Be the Best Time Ever to Buy a Home

JP Morgan Market Insights Housing. A Time To Buy

I hope these articles will give you a better insight on why you want to buy now!!!

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4334 Beechwood Circle Weston, FL 33331

This truly charming home is for rent.  Located in one of the most desirable communities in Weston, FL.  Three bedroom, two bath home is in the Ridge’s Community.  Nestled on a cul-de-sac with landscaping for privacy. 

The community offers a pool, basketball courts, picnic areas and a club house for entertaining. 

This rental is offered at $2,300.

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Wanted to Share!!

“Wealth Consists not in having Great Possessions but in having few Wants”….Esther de Waal

 

This article appeared a few weeks ago in the Wall Street Journal regarding Colby Sambrotto, founder and former CEO of FORSALEBYOWNER.COM.  It seems the founding father and livelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do.

After trying to sell his NYC apartment on his own, Sambrotto hired a broker and paid the 6% commission in order to get the job done.  His personal experience helps refute some of the myths he has been espousing for over a decade.  Here are two of his myths.

MYTH 1: You Will Pocket More Money Selling On Your Own

                   Most FSBO sites say you can save the commission by selling on your own.  This is what happened to Sambrotto. Stated in the WSJ:  “The broker, Jesse Buckler, sais he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th near Sixth Ave. was priced to low and wasn’t drawing the right buyers.  By May it went into contract after attracting many offers.  It closed for $150,000 more than the original asking price.

MYTH 2: The Internet Alone Can Sell Your Home

                   Many have said that, with the introduction of home searches on the internet, hiring an agent is no longer a necessity.  What happened to the FSBO guru when he attempted to only depend on the internet? Thia from the WSJ:  “Looking to move his family to the suburbs Mr. Sambrotto said he carefully staged his apartment for sale himself, and put it on the market.  But after using a mix of websites to market his apartment, he said he had only middle success and switched to a broker because so many buyers were so reliant on brokers.

Moral of Story…….There is a reason the real estate industry has been around for centuries; it performs a valuable service.

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Rates Staying Low but…what about Costs??

Forgiveness Does Not change the Past. But it Does Enlarge the future….   Paul Boese

 

We are enjoying extremely low rates.  But with the global economy, the national economy and unemployment where they are, no one is predicting a dramatic change in rates any time soon.  The Obama Administration floated out some interesting proposals they are considering through the Acting Director of the Federal Housing Finance Agency( FHFA) It appears that  two significant changes in housing financing are on the table.

Understand that the FHFA is the new regulator that is overseeing the restoration of viability of Fannie Mae and Freddie Mac.  They are charged with reducing the risk on loans delivered to the GSEs in order to protect the U.S. taxpayer.

Mr. DeMarco mentioned two potential changes:

Increasing the role of the private sector to lessen the risk held by the public sector.

The method mentioned was increasing the insurance coverage assumed by the PMI ( Private Mortgage Insurance) companies. One result could be higher insurance rates for  loans where customers put less than 20% down.  The second is potentially more damaging….the idea that PMI coverage may be required on loans with 21%-25%( MAYBE EVEN 30%) down.  Clearly, this is an attempt to get more fee income to the MI companies to entice them to remain viable and continue to serve those with less than 20% down.  Regardless, the net result is that more people will have to pay more money for private mortgage insurance.  How much and to what extent is not yet known but more costs to more people is bad.

Adjusting fees

recognize that the GSE’s charge fees.  Today’s fees are fairly standard geographically speaking.  Mr. Demarco is talking about adjusting the fees for areas that have proven more risky.  This proposal means the hardest hit areas will have the most difficult time recovering, because the increased fees always gets pasted down to the consumer.  Rather than “spread the risk” FHFA is talking about punishing the defenseless.

Higher costs to the consumer which makes buying a home more expensive,  Costs go up, desire to buy goes down.

So…. buy sooner rather than later!!!!

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Gas Station Resturant

Invited to go to dinner for my friend’s birthday I was told we were going to the “Gas Station restaurant” and I had to commit because the place was very small.  So I said count me in.

I was meeting everyone there so I googled Gas Station restaurant for the address and it did come up.  I still was not quite sure why this restaurant was called The Gas Station but I worked my why down toward Miami.  I got to the street and started looking for the address.  I passed a gas station and kept going.  When realizing I was going past the address I turned around and pulled into the gas station.  I then saw under the BP Station was El Carajo, still not knowing if I was at the right place I parked and went inside.  It was exactly like a gas station with clerks behind the counter helping the customers that just filled up their gas tank.  But then when you look around you see boxes and boxes of wine.  Walk toward the back and you are in a different world with beautifully decorated wine bottles and tables.

I couldn’t believe what I saw and how they had transferred this back of this gas station into a restaurant.  I learned quickly that it’s referred to as “Miami’s Best Kept Secret” but you wouldn’t think so if you were there.

The atmosphere and food were amazing.  You walk around and pick what wine you want. 

They have wine tasting on Thursday’s from 5-7. Their web site is http://www.elcarajointernationaltapasandwines.com/ and their Facebook page is El Carajo International Tapas & Wines. Phone number 305-856-2424. They are located at 2465 SW 17th Ave. Miami, FL 33145.

If you are looking for some great wine and delicious food you must go and try this out.  I promise you will not be disappointed. 

 

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