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.

SparrowBell says

Point being, why pay additional 3.8% on capital gains?

Because it is the right thing to do?

I just don't like who is targeted. How many married couples with children lets say in bay area with income $250,000+ feel rich? We don't, even though we considered the top 1% (although the bottom one) :( Why singles treated better than married; $200,000 for singles and only $250,000 for married?

zhanka says

I just don't like who is targeted.

The law affects roughly the top 2% income bracket. I see little wrong in that. You disagree. Fine.

And yes, I've been known to hit that bracket from time to time, so it is not just me wanting everyone else to pay.

Everyone can make up their own minds. But to do that they must know the FACTS of what the law does. That is the most important matter to me.

Here is some documentation about Republi-cons lying about the tax:

http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/

If you have more than 250k in profits in an existing house, you should be forced to marry someone that is 250k underwater. Then when you do your join taxes it'll all flush out. We could call this new matchmaking site www.overandunderwatermatch.com. Obviously, if you are already married then you would have to do the ceremony up in Utah and have it performed by Jacob himself, away from the watchful eye of the feds. :)

zhanka says

I just don't like who is targeted. How many married couples with children lets say in bay area with income $250,000+ feel rich? We don't, even though we considered the top 1% (although the bottom one) :( Why singles treated better than married; $200,000 for singles and only $250,000 for married?

Boo hoo! You probably don't feel rich because you choose to live in one of the most overpriced areas in the country. That's your decision though; it doesn't change the fact that you're technically rich.

This country is going broke and the middle class has been carrying the load the whole time. It's about time the upper class starts helping out.

thomas.wong1986 says

Many homeowners like me who bought many years ago, long before the bubble will be impacted.

Thomas, just wait until prices go back to 1992 levels or lower (as is often predicted), then you won't have to pay the tax.

Does this only affect real estate or any kind of income?

The health care law contains a new 3.8 percent tax on "unearned income" for high-income taxpayers. Wikipedia: "According to certain conceptions of the Labor Theory of Value, it may refer to all income that is not a direct result of labor."

SiO2 says

thomas.wong1986 says

Many homeowners like me who bought many years ago, long before the bubble will be impacted.

Thomas, just wait until prices go back to 1992 levels or lower (as is often predicted), then you won't have to pay the tax.

Yup, problem solved. That goes to show if you find yourself complaining about paying taxes on your gains, things are not that bad for you. Gain=good, Loss=Bad

zhanka says

I just don't like who is targeted. How many married couples with children lets say in bay area with income $250,000+ feel rich? We don't, even though we considered the top 1% (although the bottom one) :( Why singles treated better than married; $200,000 for singles and only $250,000 for married?

Prostoye obyasneniye (simple explanation) - single person faces higher monthly fixed costs - rent/mortgage, all utilities, some insurance, thus they have less discretionary income left. When it comes to big ticket items, including travel, you get a 50% discount basically when you are married, so I don't see anything inherently unjust about $200Gs/$250Gs single/married tax policy.