As part of the new healthcare law, there is a new tax of 3.8% on January 1 on profit from real estate. (Explained below). Without devolving into partisan discussion, what are people's thoughts about how this will impact the real estate market in Manhattan? Are there owners who are still earning gains that are that substantial from their sales? I don't imagine we'll see these cases often, but I... [more]
As part of the new healthcare law, there is a new tax of 3.8% on January 1 on profit from real estate. (Explained below). Without devolving into partisan discussion, what are people's thoughts about how this will impact the real estate market in Manhattan? Are there owners who are still earning gains that are that substantial from their sales? I don't imagine we'll see these cases often, but I wonder why this provision was included in the law if it's so uncommon.
An Example from the Washington Post and National Association of Realtors: "Say you and your spouse have adjustable gross income (AGI) of $325,000 and you sell your home at a $525,000 profit. Assuming you qualify, $500,000 of that gain is wiped off the slate for tax purposes. The $25,000 additional gain qualifies as net investment income under the health-care law, giving you a revised AGI of $350,000. Since the law imposes the 3.8 percent surtax on the lesser of either the amount that your revised AGI exceeds the $250,000 threshold for joint filers ($100,000 in this case) or the amount of your taxable gain ($25,000), you end up owing a surtax of $950 ($25,000 times .038)."
http://www.washingtonpost.com/realestate/health-care-laws-38-percent-surtax-will-not-affect-many-home-sellers/2012/07/12/gJQATidFgW_story.html[less]
Response by NYCMatt
about 13 years ago
Posts: 7523
Member since: May 2009
OMG people will never ever ever ever ever buy property in Manhattan ever again!!!!!
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Response by front_porch
about 13 years ago
Posts: 5316
Member since: Mar 2008
My guess is that the people most likely to have gains of greater than $500K are either sellers in the luxury bracket (that is, sellers of $5 million homes) or long-time homeowners who are cashing out of their home equity in order to retire.
I don't think the new tax is enough of a hit to either group to influence their decision-making. If it were, there should have been a flood of inventory coming on the past summer, and we certainly didn't see it.
ali r.
DG Neary Realty
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Response by crescent22
about 13 years ago
Posts: 953
Member since: Apr 2008
The tax applies to all capital gains and all passive income from investments, real estate or not. There is no advantage some other investment has over real estate because of the appearance of this tax.
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Response by alanhart
about 13 years ago
Posts: 12397
Member since: Feb 2007
I like the way it appears in the linked URL: 38-percent. That would be more appropriate.
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Response by Triple_Zero
about 13 years ago
Posts: 516
Member since: Apr 2012
It'll almost certainly never affect me personally, but this kind of government money-grab stinks nonetheless.
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Response by w67thstreet
about 13 years ago
Posts: 9003
Member since: Dec 2008
6% never hurts in a RE transaction so WHY should 3.8% FLMAozzzzzzz
MONEY GRAB .....fking laughing My azz offf. THE GOV'T gives trillions of dollars in TAX subsidies for RE... they take away 3.8% and that's a money grab?
That's like the fking teacher's union, WHAT an actual TEST to see how we are doing? WTF, just STFU and pay ME MORE if you want your kids educated...
FKING LMAOzzzzzz...
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Response by huntersburg
about 13 years ago
Posts: 11329
Member since: Nov 2010
>FKING LMAOzzzzzz...
Did you learn that from your daddy?
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Response by nyc1234
about 13 years ago
Posts: 245
Member since: Feb 2009
did you say $950 surtax? uh, if you are really that tight after a $500,000 profit, perhaps just don't upgrade the next apple product and u will come out even at the end of the year. i would love to meet someone who makes business decisions on this, i have a bridge i want to sell them.
although maybe the whole thread was actually sarcastic, in which case, my apologies
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Response by huntersburg
about 13 years ago
Posts: 11329
Member since: Nov 2010
>i would love to meet someone who makes business decisions on this, i have a bridge i want to sell them.
Try again, that makes zero sense.
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Response by jsw363
about 13 years ago
Posts: 235
Member since: Dec 2008
Ali: I agree that this tax is most likely to hit those that can afford it. If a seller is making over $500k on a sale, then hopefully this wouldn't influence their decision. Besides, what other alternatives do they have if they're ready to retire and need the cash.
While it makes sense politically to tax this group that can afford it, I wonder if it will realistically generate much revenue. Regardless, I'm not in favor of adding more taxes to an already difficult sale process.
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Response by Snuffles
about 13 years ago
Posts: 173
Member since: Apr 2010
kind of reminds me of the old way where you were taxed if you didn't put the capital gains into a more expensive house. So if you want to avoid this tax, just keep upgrading gradually.
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Response by w67thstreet
about 13 years ago
Posts: 9003
Member since: Dec 2008
Wow a govt sponsored bubble, where if you kept getting more of something you could delay paying it? Oh you mean PhDs in art history, with a 4 year stint in Florence.
Hahahjahahhanaaaaaaaa. Nope no bubble here. Lets look under that rug, get your $1k Dyson vacuum ready. Cause as we all know nothing says success like a Dyson!
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Response by w67thstreet
about 13 years ago
Posts: 9003
Member since: Dec 2008
Hey sixpercenters! Time to get the open houses planner open!!!! Practice twisting that key. And don't forget to sell on the waterfront and next to Central Park! It always goes up!!!!!!
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Response by memito
about 13 years ago
Posts: 294
Member since: Nov 2007
w67th,
I am a bigger RE bear than you are, but just don't underestimate how far the government will go to continue the interest rate/RE Ponzi scheme.
Traditional economics and finance were thrown out the window after 2009 and replaced with inflationary and fraud-masking policies in an attempt to re-inflate the bubble. They have desperately pushed up or stabilized RE prices in the face of higher maintenance costs though their inflation-driving practices have helped push up rents.
Other than a handful of cases, RE/mortgage fraud is being ignored by the FBI and IRS. Dirty foreign and domestic money is being laundered in cities such as Miami and NYC b/c such investments have been proven to be untouchable by both foreign and US authorities. No one cares. (Hell, the NAR has lobbied to support unaudited all-cash purchases that favor drug-dealers and corrupt foreign money.)
The next step will probably be a type of mortgage forgiveness program that will help put in a floor on what are inflated RE prices. It may not have an impact in NYC, but it will potentially reignite a nationwide opinion that RE investments are a win/win game where the only losers are taxpayers and conservative, rational buyers/investors.
Even if NYC RE prices did drop, many average buyers would be outbid by an all-cash investor class that made its killing during the RE bubble and QEn policies - and can afford to just sit on non-performing assets. The gov't had stacked the deck in favor of asset holders before and after the 2008-9 crisis and could care less about rational economics/finance or affordability. Meanwhile, "savvy" NYC RE investors are in a state of denial that they have been the beneficiaries of the greatest asset transfer in the history of our country (ie; risk assets from the private to public sector.)
Yeah, so a 3.8% tax on gains after $500K doesn't mean anything while the government is actively opening up thousands of fresh Monopoly game boxes to pour more "cash" into the RE game....
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Response by nyc1234
about 13 years ago
Posts: 245
Member since: Feb 2009
@huntersburg
don't worry, columbia county will explain it to you later
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Response by gcondo
about 13 years ago
Posts: 1111
Member since: Feb 2009
I like how some say with a profit on a house of 500,000, how dare you complain about a 950 dollar tax.
say goodbye to the American dream.
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Response by gcondo
about 13 years ago
Posts: 1111
Member since: Feb 2009
Question, I have a condo which I will be selling at a loss. As my income qualifies me for the additional tax, will I be getting an additional refund of 3.8% times my loss?
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OMG people will never ever ever ever ever buy property in Manhattan ever again!!!!!
My guess is that the people most likely to have gains of greater than $500K are either sellers in the luxury bracket (that is, sellers of $5 million homes) or long-time homeowners who are cashing out of their home equity in order to retire.
I don't think the new tax is enough of a hit to either group to influence their decision-making. If it were, there should have been a flood of inventory coming on the past summer, and we certainly didn't see it.
ali r.
DG Neary Realty
The tax applies to all capital gains and all passive income from investments, real estate or not. There is no advantage some other investment has over real estate because of the appearance of this tax.
I like the way it appears in the linked URL: 38-percent. That would be more appropriate.
It'll almost certainly never affect me personally, but this kind of government money-grab stinks nonetheless.
6% never hurts in a RE transaction so WHY should 3.8% FLMAozzzzzzz
MONEY GRAB .....fking laughing My azz offf. THE GOV'T gives trillions of dollars in TAX subsidies for RE... they take away 3.8% and that's a money grab?
That's like the fking teacher's union, WHAT an actual TEST to see how we are doing? WTF, just STFU and pay ME MORE if you want your kids educated...
FKING LMAOzzzzzz...
>FKING LMAOzzzzzz...
Did you learn that from your daddy?
did you say $950 surtax? uh, if you are really that tight after a $500,000 profit, perhaps just don't upgrade the next apple product and u will come out even at the end of the year. i would love to meet someone who makes business decisions on this, i have a bridge i want to sell them.
although maybe the whole thread was actually sarcastic, in which case, my apologies
>i would love to meet someone who makes business decisions on this, i have a bridge i want to sell them.
Try again, that makes zero sense.
Ali: I agree that this tax is most likely to hit those that can afford it. If a seller is making over $500k on a sale, then hopefully this wouldn't influence their decision. Besides, what other alternatives do they have if they're ready to retire and need the cash.
While it makes sense politically to tax this group that can afford it, I wonder if it will realistically generate much revenue. Regardless, I'm not in favor of adding more taxes to an already difficult sale process.
kind of reminds me of the old way where you were taxed if you didn't put the capital gains into a more expensive house. So if you want to avoid this tax, just keep upgrading gradually.
Wow a govt sponsored bubble, where if you kept getting more of something you could delay paying it? Oh you mean PhDs in art history, with a 4 year stint in Florence.
Hahahjahahhanaaaaaaaa. Nope no bubble here. Lets look under that rug, get your $1k Dyson vacuum ready. Cause as we all know nothing says success like a Dyson!
Hey sixpercenters! Time to get the open houses planner open!!!! Practice twisting that key. And don't forget to sell on the waterfront and next to Central Park! It always goes up!!!!!!
w67th,
I am a bigger RE bear than you are, but just don't underestimate how far the government will go to continue the interest rate/RE Ponzi scheme.
Traditional economics and finance were thrown out the window after 2009 and replaced with inflationary and fraud-masking policies in an attempt to re-inflate the bubble. They have desperately pushed up or stabilized RE prices in the face of higher maintenance costs though their inflation-driving practices have helped push up rents.
Other than a handful of cases, RE/mortgage fraud is being ignored by the FBI and IRS. Dirty foreign and domestic money is being laundered in cities such as Miami and NYC b/c such investments have been proven to be untouchable by both foreign and US authorities. No one cares. (Hell, the NAR has lobbied to support unaudited all-cash purchases that favor drug-dealers and corrupt foreign money.)
The next step will probably be a type of mortgage forgiveness program that will help put in a floor on what are inflated RE prices. It may not have an impact in NYC, but it will potentially reignite a nationwide opinion that RE investments are a win/win game where the only losers are taxpayers and conservative, rational buyers/investors.
Even if NYC RE prices did drop, many average buyers would be outbid by an all-cash investor class that made its killing during the RE bubble and QEn policies - and can afford to just sit on non-performing assets. The gov't had stacked the deck in favor of asset holders before and after the 2008-9 crisis and could care less about rational economics/finance or affordability. Meanwhile, "savvy" NYC RE investors are in a state of denial that they have been the beneficiaries of the greatest asset transfer in the history of our country (ie; risk assets from the private to public sector.)
Yeah, so a 3.8% tax on gains after $500K doesn't mean anything while the government is actively opening up thousands of fresh Monopoly game boxes to pour more "cash" into the RE game....
@huntersburg
don't worry, columbia county will explain it to you later
I like how some say with a profit on a house of 500,000, how dare you complain about a 950 dollar tax.
say goodbye to the American dream.
Question, I have a condo which I will be selling at a loss. As my income qualifies me for the additional tax, will I be getting an additional refund of 3.8% times my loss?