Do I Have to Pay a Real Estate Tax On My New Home In Prattville Alabama? Part 2

Do I Have to Pay a Real Estate Tax On My New Home In Prattville Alabama? Part 2

 

In yesterday’s blog, we talked about the new Federal 3.8% Medicare tax on the capitol gains you make when you sell your home in Prattville, Montgomery, and the River Region, AL, and we used an example to see how the tax is calculated.  Then we asked what happens if the amount of capitol gains (profit) you make when you sell your home is over the $250,000 limit ($500,000 for married couples)?

That’s where another rule, the income limit, applies.  The law says this new Federal Medicare tax only applies to people IRS real estate tax in Prattville ALwhose AGI (adjusted gross income) is more than $200,000 per year ($250,000 for married couples). So if you sell your house and make a profit of more than $250,000, then you need to look at your income to see if you’ll have to pay the tax.  As long as your AGI, including the capitol gain you made when you sold your house, is at or under $200,000 ($250,000 for couples) then you won’t have to pay the tax.  Let’s look at an example:

Let’s say when you sell your house you make a capitol gain of $300,000.  This capitol gain is $50,000 more than the limit according to the law from yesterday’s post.  But you still might not have to pay the Medicare tax because the law allows you to keep $250,000 of the capitol gain without paying any tax on it.  So the other $50,000 profit you made gets counted as part of your AGI.  As long as your AGI, including the profit you made on selling your home, is $200,000 or less that year, you won’t have to pay the tax.

So let’s continue with the example we used above and start with the $50,000 amount of excess capitol gain you made when you sold your house.  Add this amount to your AGI.  If your AGI plus the excess capitol gain totals more than $200,000 then you will have to pay the tax, but only on any part that is over the AGI limit.  If your AGI plus the excess capitol gain totals $200,000 or less, then you won’t have to pay the real estate tax.  It’s that simple.  Consult your accountant or tax preparer for advice specific to you and your situation.

The new Federal Medicare tax on capitol gains from selling a home don’t go into effect until January 1, 2013.  And you’ll still be able to deduct your mortgage interest every year on your income taxes like you have previously been able to.

That nasty rumor about everyone having to pay a real estate tax when they sell their home really scared a lot of people.  But now, looking at some examples of how the new law applies, you can see that the new Federal real estate tax on excess capitol gains from the sale of a home is really not so scary after all.

Why would a real estate agent who works only for buyers write a blog about something that might happen when you sell your home?  The answer is simple.  When you buy a home for sale in Prattville, Montgomery, and the River Region, AL, you think about what might happen in the future when you sell your house.  Remember that as Guaranteed Buyer’s Agents, we help you buy smart so you can make a bigger profit when you sell your home later.

 

Do I Have to Pay a Real Estate Tax On My New Home In Prattville Alabama? Part 2

 

 

 

Tags: , , , , ,

Leave a Reply