patrick.net

Zhanka, your description of the tax is faulty. The tax only applies to

1. Capital gains, including capital gains on real estate

2. Capital gains on real estate, only if in excess of the already established 250k+250k capital gain exemption per married couple (note: 1st residence, min holding period, etc).

3. If AGI is over 200k/250k when single/married (as you said)

Please understand that "Capital Gains" means the PROFIT on the transaction (sales price minus purchase price and expenses). This tax is NOT a tax on the transaction amount, it is a tax on the profits (gains).

By the way, the Republican propaganda machine is hard at work spreading lies about the above tax. They try their damndest to convince people that this is a VAT on housing transactions. That is NOT true.

Also keep in mind that nowadays, many people who sell real estate have capital losses and not capital gains!

By the way, this tax is part of the "Obamacare" bill (The Patient Protection and Affordable Care Act (PPACA)).

Reference:
http://taxfoundation.org/blog/show/26741.html

justme says

Also keep in mind that nowadays, many people who sell real estate have capital losses and not capital gains!

Many homeowners like me who bought many years ago, long before the bubble will be impacted. Not everyone ~75% sold their home during the bubble. They too will be inpacted by their future sales transation. Bill shifts the burden and passes the buck to the other people who never particated in the bubble.

When the bubble crashed, expectation was that spending should come down to reality to match the economy. But it seems like the government unions can't accept that, they just rather whine and moan and tax everyone else to get what they want, they want to spend us into their fantasy land benefits and pensions.

I'm going to vote no against it, but this state has way too many socialist lefties so who knows. Either way, hope this does not pass.

thomas.wong1986 says

justme says

Also keep in mind that nowadays, many people who sell real estate have capital losses and not capital gains!

Many homeowners like me who bought many years ago, long before the bubble will be impacted. Not everyone ~75% sold their home during the bubble. They too will be inpacted by their future sales transation. Bill shifts the burden and passes the buck to the other people who never particated in the bubble.

I think that if you have more than 250k/500k in profits it is quite okay that you have to pay this tax.

One can also think of this tax as a bit of poetic justice applied to all the old-timers that have benefitted from lower property taxes in California through the inequities of Prop. 13.

Thomas, I refuse to feel sorry for you regarding this matter.

Justme,

Point being, why pay additional 3.8% on capital gains? Whether most people incur capital loss with real estate is beside the point. And, this apply to all investment incomes, not jus real estate. I don't know how many actually misunderstand that being levied on whole assets ... Well, if SCOTUS strikes down obmacare, maybe, the law would repeal after all.