Blog Archives

The Famous 3.8% Real Estate Tax

There’s nothing like misinformation to cause confusion and despair.

The popular story we’ve heard circulating a lot is that—starting January 1st, 2013—anyone selling a home in this country will be hit with a new 3.8% tax to help pay for President Obama’s new healthcare plan.

Not true.

It’s true that the new tax does take effect with the start of the new year, and it’s true that some real estate sales will be subject to the tax.  But it’s not a real estate tax, per se, and many people selling homes will not have to pay the tax.

So, just what is it?

“It” is a tax on some investment income.  Interest, dividends, rent and capital gains will be subject to the tax, but only for people whose adjusted gross income is above $200,000, or couples who file jointly and whose AGI is above $250,000.

If you’d like information that makes this tax more understandable, check out this one page flyer showing the Top Ten Things You Need To Know About The Tax.

Hopefully, these facts will show that—while the tax is real and it’s about to take effect—its scope is more limited than many people have been led to believe.


The Silver Lining Lurks…

With all the news about government bailouts, plummeting shares and takeovers aimed at preventing failures, are dark days ahead for the economy?  Some, no doubt, think so.  But I can’t help but sense that—amid all the financial maneuvering and restructuring—something else is lurking:  Opportunity.

Oh, I might be nuts for thinking this, but I see some investors—the ones who’ve been conservative and cautious while others were wreckless—as coming out real winners in the long run.

Never a dull moment!

Never a dull moment!

For example, consider American International Group, Inc., which is trying to come up with cash to pay off an $85 billion dollar government loan.  AIG owns $16 billion in real estate holdings throughout the world, including a 15-floor building in Marunouchi, Japan’s most expensive business district.  Some of these so-called ‘trophy’ properties, which don’t come up for sale often, may wind up with a big ‘For Sale’ sign out front.  Unfortunately, holdings like these are a little out of my league (!), but for someone, I think they spell ‘opportunity’ in a big way.

And speaking of opportunity, with the news media so focused on uncertain economic times, you may have missed what may be shaping up to be a modern day gold rush unfolding in one part of the Gulf Coast.  Speculation is growing that a natural gas discovery called the Haynesville Shale in northwest Louisiana could be huge.  Energy companies are buying mineral rights from property owners at a fast pace.

These are just a few of the reasons why real estate continues to be such a valuable commodity and—even during a jittery financial market—a solid investment.