Energy license/retrofits and health care ‘transfer tax’ claims are false! false! false!


Washington, D.C. (April 29, 2010) – Two e-mail chains have circulated among members and are generating a lot of confusion in the Realtor® ranks. One claims that pending legislation in the Senate would require an energy license or retrofit for home sales, the other that the recently passed health care bill contains a 4.0 percent “transfer tax” on homes sales. Both are wrong. Here’s the real skinny on both. And PLEASE pass on to your members as quickly as possible:

 

“Homeowners—Listen Up” e-mail: This e-mail is inaccurate. There is no requirement in H.R. 2454, The American Clean Energy & Security Act, that home sellers obtain either a license or energy audit or make energy retrofits before they can sell their home. The legislation, earlier passed by the House, is pending in the Senate.

         Here are the two REAL provisions in the bill:

 

Section 202 (Building Retrofit Program) would offer matching grants for home improvements. State government would administer the program, which is voluntary and available to all property owners.

 

Section 204 (Building Energy Performance Labeling Program) would apply to new construction only and prohibit time-of-sale labeling. The original energy audit and MLS listing provisions were deleted as the result of NAR insistence; existing real estate was excluded from the bill’s requirements.

 

NAR will work to ensure that these provisions are retained in the Senate version. We were also instrumental in eliminating time-of-sale energy efficiency requirements from the bill. Senators John Kerry (D-Mass.), Lindsay Graham (R-S.C.), and Joe Lieberman (I-Conn.) are pursuing bipartisan support for an alternative to the House bill, and NAR will monitor that progress to ensure residential and commercial real estate are not adversely impacted.

Click here for a packet of facts and FAQs NAR pulled together after the House bill was passed last summer. For more information on the energy bill, contact: Austin Perez, 202-383-1046, aperez@realtors.org “National Real Estate Transfer Tax” e-mail: An opinion piece in the Spokane, Wash., Spokesman-Review last month reported inaccurately that the health care bill contained a provision for a 4.0 percent “sales tax” or “transfer tax” on the sale of a home. This e-mail, too, was circulated far and wide, and is inaccurate. We responded to questions from the media and members and continue to do so. This week we got a boost from an unexpected third-party, the Portland (Ore.) Oregonian. The Oregonian did some old-fashioned fact-checking, and reached correct conclusions published Tuesday, April 27. Read the analysis by FACTCHECK.ORG, SUMMARY: THE CLAIM IS FALSE

 

Let us sum up: The health bill included a provision that imposes a new 3.8 percent Medicare tax for some high-income households that have “net investment income.” Any revenue collected by the tax is dedicated to the Medicare hospital insurance program.

This new tax applies only to households with Adjusted Gross Income of more than $200,000 for individuals or more than $250,000 for married couples. Since capital gains are included in the definition of net investment income, an additional tax obligation might result from the sale of real property. But there are two major factors in figuring out the tax, which is complex. Keeping in mind that the new 3.8 percent Medicare tax is assessed only when the $200K/$250K AGI limits are exceeded, the amount of net investment income subject to tax is the LESSER of 1) total net investment income OR 2) the excess of AGI over the $200K/$250K AGI limits.

 

However, even when the AGI limits are met, the new tax would not be applied to capital gains that result from the sale of a home, since the existing home sale capital gains exclusion rule still applies – $250,000 (individual)/$500,000 (couple). So if the gain from the sale of the primary residence is below that amount, then NO Medicare tax will have to be paid on the gain. The new Medicare tax would apply only to a home sale gain realized in excess of the $250K/$500K that pushes the filer’s AGI over the $200K/$250K income limits.

 

Some other quick points:

 

There is no such exclusion for the sale of a second home.

The new Medicare tax will take effect January 1, 2013.

The legislation makes no changes to the mortgage interest deduction.

 

NAR has posted a detailed Q&A on this issue and on the new health care bill. The Q&A will be updated as other provisions are developed.

 


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