If you’re considering selling your Santa Cruz home, you may have heard rumors that there is a new tax going into effect in January, 2013. Here’s the rundown on what the tax really is – and isn’t.
The new tax is called the ‘‘Unearned Income Medicare Contribution.” It is a 3.8 percent tax on the net investment income of high-income taxpayers. The tax will apply to those with an adjusted gross income of more than $200,000 ($250,000 for joint filers), with no indexing for inflation.
The Good News
Odds are that you will never pay this tax.
Why You Most Likely Won’t Pay the New Tax
The tax will apply to capital gains, not sale proceeds. Because of the current exclusion of gains on home sales — up to $500,000 (joint) or $250,000 (single) on a primary