Statistics Script

Search This Blog

Friday, January 21, 2011

When to Sell First or Second Home at Substantial Gain

The Tax Relief Act of 2010 imposes a Medicare surtax of 3.8% on certain kinds of income after 2012.  The tax is levied on 'investment income' of married taxpayers with modified adjusted gross incomes (MAGI) exceeding $250,000 ($200,000 for singles; $125,000 for married filing separately).  The sale of a second home is 'investment income' for these purposes, as is the gain on sale of primary residence when it exceeds $500,000 for married filing jointly ($250,000 single).  So if a substantial gain is anticipated on a first or second home, selling before 2012 will avoid the 3.8% Medicare tax.  The imposition of taxes with future effective dates can be changed before the dates are reached.

No comments: