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Posted at 3:40 PM ET, 02/ 1/2011

Does health-care reform tax home sales?

By Ezra Klein

I get a steady stream of e-mails asking that question. Apparently, there's a chain letter going around that says, among other things, "IF YOU SELL YOUR $400,000 HOME, THIS WILL BE A $15,200 TAX." Yes, the caps are in the original.

Anyway, no one is taxing the sale of your $400,000 home. FactCheck.org explains it all. The short version is that this is a tax on certain residence sales meeting certain conditions and involving people with very high incomes:

Only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

More here.

By Ezra Klein  | February 1, 2011; 3:40 PM ET
 
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Comments

Actually Ezra, your answer is very disconcerting, not comforting. I would bet that almost no one, D and R, have any idea that for the first time there is a Federal tax on residential real estate sales above and beyond the normal capital gains tax.

Just another very bad idea.

Posted by: johnmarshall5446 | February 1, 2011 4:02 PM | Report abuse

johnmarshall5446 is correct: the tax does exist, despite the fact that it is (for the present moment) somewhat limited in scope. The referenced tax can be waived by a member of the ruling regime and is yet another example of the "taxes for thee but not for me" attitude expressed through the PPACA.

I'd continue to urge rethinking by those who currently consider it wise to put such sweeping waiver power into the hands of any executive: a few years from now, the "me" and "thee" might swap places... and the former "me"s aren't going to be so happy.

Posted by: rmgregory | February 1, 2011 4:10 PM | Report abuse

Ok, the tax exists and it's limited in scope. Nevertheless, this is quite a stupid tax. Better to have simply raised income tax rates on those making more than $200k/yr to pay for it. This is a rube-goldberg mechanism for raising money.

Posted by: constans | February 1, 2011 4:13 PM | Report abuse

I give Ezra a lot of grief for how wrong he gets a lot of stuff, but I had done a fair amount of research on this one several months ago (when I had family members first getting this email) and I believe Ezra has this one correct.

In fact, he could emphasize the point that the tax is on the PROFIT of the home, not just the sale. So not only does it not apply unless you make a high income (or at least 'high' per Democrats), but it then only applies to the PROFIT on the sale. For example, even if you are in the income bracket eligible for the potential tax (i.e., you make more than $200k single/$250k married), if you are single and sell a $750,000 home you paid $500,000 for, you would still owe no tax since the first $250k of 'profit' is exempt.

(note: if I recall, the $250k 'profit' exemption only applies to primary homes; if you sell a second/vacation home the exemption does not apply, and you would pay tax on the entire amount of the profit. Someone correct me if I'm wrong.)

Of course this isn't to say I agree with any of these taxes designed to punish the achievers in society and transfer the fruits of their labor to the non-achievers, but just want to chime in and confirm Ezra's post....it's nice to be agreeable once in awhile :o).

Posted by: dbw1 | February 1, 2011 5:07 PM | Report abuse

The point is that the Democrats HID a provision in the Obamacare Bill that would, in fact, tax residence sales in certain circumstances. Pelosi played the shell game and got caught! 2500 pages full of opportunities for the government to screw the public. Another example of why we can't trust the government! www.eclecticramblings.wordpress.com

Posted by: my4653 | February 1, 2011 5:17 PM | Report abuse

Yes, how insidious of Congress to actually *pay for* its government programs!

Posted by: constans | February 1, 2011 5:52 PM | Report abuse

It's insane the level to which these guys just want to pile all of the tax burden on a small percentage of the people. Are "rich" people the only people who care about supporting the US. I guess it makes sense to defer part of my salary into the future if I sell something huge so that my income is under 250k? Or does the profit count towards your income? What crazy rules we live under...

Posted by: staticvars | February 1, 2011 11:45 PM | Report abuse

staticvars: "It's insane the level to which these guys just want to pile all of the tax burden on a small percentage of the people."

Yes, it makes much more sense to raise taxes on people who are having problems paying their utility bills.

Really, we're not even taxing upper income folks at the rates we had under Clinton. Why would that be so terrible? As one of those people, I can testify that it's not that much of a burden. Everyone else is being told to sacrifice, that there will be education cuts, service cuts, safety net cuts. And I'm being asked to do...what, exactly?

Posted by: dasimon | February 2, 2011 3:16 AM | Report abuse

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