Team Reba Real Estate

3.8% Medicare Tax in 2013

Filed under: tax issues, property taxes, investment property, real estate, landlord, legal issues, economic issues, rental — Michael Lindekugel @ 11:57 am

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. Also of relevance for rental property owners, this new tax applies to a real estate investor’s rental income if they have income above the $200,000/$250,000 income thresholds.

The net effect of both capital gain tax increases is a new 23.8 percent tax rate for higher earners—the highest rate for long-term capital gains since 1997. The Joint Committee on Taxation estimates the new Medicare tax on investments will cost taxpayers over $30 billion annually. Additionally, the modified adjusted gross income threshold at which this Medicare tax will apply will not be indexed for inflation, which means an increasing number of taxpayers will be snared by this tax provision.

Overall, the economic impact of these tax increases will be felt by the very investors who help promote long-term economic growth. In 2007, taxpayers with incomes greater than $200,000 reported 47 percent of all interest income, 60 percent of all dividends and an amazing 84 percent of all capital gains.

The Coming Tax Increaes - Comparison

	Current	January 2013
Conventional Short-Term	35.0%	43.4%
Conventional Long-Term	15.0%	23.8%
AMT Short-Term	28.0%	31.8%
AMT Long-Term	15.0%	23.8%

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Don’t forget to fill out your census data this month!

Filed under: property taxes, government, Fair Housing, tax issues, economic issues, real estate, rental — Reba Haas @ 10:14 am

You may have noticed that you received a piece of mail this month from the U.S. Department of Commerce. It has a big, can’t ignore it, sign on the front of the envelope that says “Your response is required by law”. If you’re concerned about privacy issues you can check out their website for more information. www.census.gov/2010census

For the housing industry it helps the government track how many people live in rental housing or owner-occupied housing. These statistics have been followed closely for several decades now because the housing industry impacts so much of our national economy - which has become even more evident as the USA sorts itself out through this recent financial crisis. Property taxes and excise taxes (paid when homes are sold/change hands) having gone down drastically over the past couple of years which has definitely impacted local economies from cities, to counties, and states who rely on those funds to fill the majority of their general funds, paying for all manner of services.

So, do your civic duty and fill out your census!

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Buying a foreclosure home in WA State? Be prepared that excise tax may become your responsibility if this Senate measure passes.

Filed under: Pierce County, King County, title/escrow, property taxes, Snohomish County, townhouse, Conventional loans, FHA/VA, single family, market activity, tax issues, buyer, seller, economic issues, legal issues, Puget Sound, foreclosure, real estate, condo, mortgage/loan, Washington — Reba Haas @ 10:54 am

WR Urges Call to Action on Proposed Tax Increase
Please send a message immediately to State House members to stop taxes on real estate. The Senate’s budget increases the B&O .25% on real estate professionals, as well as shifts the real estate excise tax onto the buyer of a foreclosed home. The Senate’s budget passed the Senate and is now being considered in the House.

The message above was sent out to real estate agents who are members of the local multiple listing service along with a link to the site where we could send a message to our representatives. For the general public, I realize that you may not care if real estate professionals are hit with a higher Business & Occupation (B&O) tax, but know that we have the highest rate of such a tax in this state.

The more important issue to the home buying public is the shift of moving the excise tax payment burden from the seller to a buyer of a foreclosed home. All this does is help lessen the costs of banks when selling their foreclosed inventory and it puts a higher cost burden on the buyers, who in many cases for first time buyers are just barely qualifying for the amounts that they’re purchasing in. If excise tax, which runs 1.78% here, is now put on them as a closing cost fee, then that buyer ends up paying the tax twice because they’ll have to pay it again later when they sell the home at whatever that new value will be at that time. Also, it will lessen the amount of home purchasing power that they’ll have, at least when it comes to buying bank owned homes because that will likely be part of the qualifying factors for the lender when they do their underwriting review. If a buyer is qualified at $200k for a traditional purchase but now 1.78% ($3,560 in this case) must be considered, then a buyer may not be able to buy a $199k home because the excise tax payment requirement puts them just out of reach if they originally only needed $7,000 for down payment via FHA (3.5%), PMI payment of roughly the same amount (possibly wrapped into financing) still increasing cost of loan and impacting qualifying factors, and reducing what they might have in their “reserve” accounts which are also factored in for qualifying because most banks want 3-6 months worth of funds available at closing.

If you are in support of not having the excise tax payment shift made to buyers, please contact your State representative immediately!

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Team Reba November 2009 Real Estate Newsletter

Filed under: staging, tax issues, monthly newsletter, market activity, property taxes, commercial real estate, title/escrow, real estate, tenant, Washington, rental, economic issues, seller, Puget Sound, buyer, property management — Reba Haas @ 3:39 pm

Here is a link to my “November Real Estate Update“:

This Newsletter is full of interesting and useful information that I think you will enjoy whether you are a buyer, seller, homeowner, or renter.

This month’s issue includes topics such as:

“Vital Information for First-Time Buyers”;
“Relieving the Stress of Packing”;
“Making Your Home Age Appropriate Creates Appeal”;
“Real Estate Investment Buying Tips”;
“Extending Homebuyer Tax Credit Best Tool for Sustaining Housing Recovery”;

Plus a roundup of November real estate activity as well as much more advice and information.

I hope you enjoy this monthly newsletter. If you have any comments, please e-mail them to me. Or, if you would like to see a certain topic covered in future months, let me know that too!

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Video to help you learn more about your local WA State property taxes

Filed under: title/escrow, property taxes, tax issues — Reba Haas @ 2:16 pm

It’s a question we get all the time in real estate, “what are the property taxes here and what do they pay for?” Well, the answer will vary depending on where you live, but, if you take a few minutes to watch this very useful video, you’ll learn a lot about our local property taxes, how they are levied, if they change when assessment values rise or decline, and what they cover.

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April 14, 2010

3.8% Medicare Tax in 2013

March 18, 2010

Don’t forget to fill out your census data this month!

March 9, 2010

Buying a foreclosure home in WA State? Be prepared that excise tax may become your responsibility if this Senate measure passes.

November 1, 2009

Team Reba November 2009 Real Estate Newsletter

July 29, 2009

Video to help you learn more about your local WA State property taxes

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