Medicare tax scare: Should you sell your home soon?

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Due to a looming new Medicare tax on investment earnings, you may be tempted to unload your principal residence to the first qualified buyer you can find. In a word—don’t.

Despite what you may have heard or read, the 3.8% Medicare tax, which is scheduled to take effect in 2013, won’t erode the amount of gain you can shelter from tax through the home sale exclusion (up to $250,000 for unmarried individuals or $500,000 for married joint-filing couples). The tax consequences for a future home sale, if any, may be relatively small.

But that doesn’t mean you should keep all your real estate property.

Strategy: Consider putting up a vacation home or rental property for sale. Reason: The $250,000/$500,000 home sale gain exclusion doesn’t apply to any real estate except your principal residence. So gains from other sales may be hit with the extra tax if you have a high income.

Conversely, if you sell property before 2013, you’re in ...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment