The New Real Estate Tax and How it Affects YOU

Print Friendly

Effective January 1, 2013, Uncle Sam may have an extra bill for you to pay. Do you have adjusted gross income (AGI) that exceeds $200,000 ($250,000 as a couple filing a joint return)? If you answered “yes,” your income will be taxed an additional 3.8% on the lesser of your investment income or any income over the AGI cap mentioned above.

There are many different situations this so-called “medicare” tax will affect, including the sale of investment property and rental income, so knowing exactly how it affects you as an investor is imperative. Visit “The 3.8% Tax; Real Estate Scenarios & Examples” for more on how it may affect you and your livelihood and check with your tax professional for more.

Interested in buying or selling your investment property? Call Commercial Investment Strategies, your expert in multifamily real estate and exchanges.

  • You should claim the pro-rated amonut you paid on the old property and any pro-rated amonut you paid on the new property (often in advance of the year-end billing), then remember to make any necessary adjustments after official tax bills come out and get re-divided. In theory, you paid the taxes by giving the money to somebody else (or putting it into escrow for taxes) and you are allowed to assume they actually made the necessary payments to the necessary authorities. A lender holding tax escrow should give you an annual statement of taxes collected, held and paid out.