A Sales Tax When You Sell Your Home?

Photo (cc) by Nick Bastian Tempe, AZ

Following is an email I was forwarded from a reader. It’s from someone who calls himself Joe – maybe you’ve gotten one like it.

DID YOU OR ANYONE KNOW THIS?

REAL ESTATE SALES TAX TO GO INTO EFFECT 2013 (Part of HC Bill)
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That’s $3,800 on a $100,000 home etc. When did this happen? It’s in the healthcare bill. Just thought you should know. So, this is “change you can believe in?”

As proof, Joe inserted this article from the Spokane Spokesman-Review dated March 28th, 2010, which says in part:

Tax on Home Sales. Imposes a 3.8 percent tax on home sales and other real estate transactions. Middle-income people must pay the full tax even if they are “rich” for only one day – the day they sell their house and buy a new one.

Then Joe goes on to say:

Under the new health care bill – did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don’t kick in until 2013 (presumably after obama’s re-election). You can thank Nancy. Harry and Barack AND your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a 15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes your November and 2012 votes more important?

Oh, you weren’t aware this was in the obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November!

You’re right about two things, Joe: People do have the right to know the truth, and there is an election in November. About everything else in your email, however, you’re wrong – and you’re either a jerk for spreading what you know to be false, or you’re a fool for believing it.

Like much propaganda that you’ll see online, on some “news” program, or from people who make their living creating controversy, this one contains a kernel of truth. Rather than explain it, however, I’ll simply show you the clarification that ran in the same newspaper that printed the false information in the first place. Here’s a cut-and-paste from the Spokane Spokesman-Review dated April 3, 2010:

In his recent guest column regarding the impact of the health care bill, Paul Guppy of the Washington Policy Center claimed that a 3.8 percent tax on all home sales was a part of the recently passed legislation. This is inaccurate and needs to be corrected. The truth about the bill is that if you sell your home for a profit above the capital gains threshold of $250,000 per individual or $500,000 per couple then you would be required to pay the additional 3.8 percent tax on any gain realized over this threshold.

Most people who sell their homes will not be impacted by these new regulations. This is not a new tax on every seller, and that correction needs to be made. This tax is aimed at so-called “high earners” – if you do not fall into that category you will not pay any extra taxes upon the sale of your home.

In short, rather than having to a pay a tax of 3.8 percent of the amount you realize on the sale of your primary residence, the truth is something quite different – that if your joint-return adjusted gross income is over $250,000, you might have to pay a tax of 3.8 percent of the amount of gain you realize over $500,000.

Do try this at home

Unlike so many things you see on TV that admonish you “Don’t try this at home!” I’d encourage you to do your own propaganda debunking. Here are the steps I took to lay waste to this particular piece of foolishness:

Step One: If you read something that seems as ridiculous as this does, don’t automatically believe it. (Had Congress passed a bill that was going to cost everyone who sells a home 3.8 percent of the proceeds, don’t you think you’d have heard about it long before now? Trust me – you’d certainly have read about it here!)

Step Two: Put the “facts” into your favorite search engine. In this case, for example, I did a search for “3.8% home sales tax.”

Step Three: Read some of the results. It took my search engine about one-third of a second to point me to several articles by actual journalists written over the last several months about this particular piece of disinformation.

If you see anything from either side that seems too silly to be true, send it along and I’ll share it. When it comes to Washington, it’s hard enough to know what to do when you have the facts. Let’s all pitch in and try not to muddy the water by spreading hysterical idiocy.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 Cars That Lose the Most Resale Value After 5 Years
10 Cars That Lose the Most Resale Value After 5 Years

Two types of vehicles are especially likely to see steep plunges in value.

This Online Bank Rated Best for Second Year in a Row
This Online Bank Rated Best for Second Year in a Row

This bank pays interest without charging monthly fees, but there’s a downside.

How to Avoid Being Surprised by 7 Nasty Expenses
How to Avoid Being Surprised by 7 Nasty Expenses

Major expenses are difficult to predict, but there are ways to make sure you’re protected.

5 Medicare Mistakes to Avoid for a Healthy Retirement
5 Medicare Mistakes to Avoid for a Healthy Retirement

Medicare can be confusing. Beware these missteps — which can hike your costs.

14 Things We Buy and Then Almost Never Use
14 Things We Buy and Then Almost Never Use

Save your money. These items seem alluring but they often end up as coat racks and dust magnets.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.