Property Taxes Based on Income

There are SOME who will have taxes based on INCOME, and PROFITS above the Primary Home Exlcusion. Details: For a LONG time, we’ve had capitol gain taxes. We’ve also had an exemption for GAINS on your PRINCIPAL residence up to $500,000 for a long time. Capitol gains is when you buy something, and then sell it for a big profit!. SO – Here are the rules. IF a couple makes MORE than $200,000 per year, OF a single person makes more than $125,000 per year – they may have to pay this capitol gains tax (3.8%) IF:They are selling their PRIMARY residence – And they sell it for over $500,000 more than they purchased, then they would pay 3.8% on the amount OVER $500,000 (Home purchase $100,000 – sell for $625,000 for a profit of $525,000 – $25,000 over the $500,00 exemption, then 3.8% tax on the $25,000 or $950) IF the same couple is selling their 2nd home, AND (the example above) they sell the home for $625,000 – they will have $525,000 of PROFIT – they will pay the capitol gains tax of 3.8% on the profit, then the tax would be $19,950. But that is on the PROFIT – a much lower tax rate than the INCOME tax rate. In the example that Sherrie sent – IF this was a PRIMARY residence, AND the couple made more than $200,000 per year, no tax would be paid because the couple was selling their PRIMARY residence for LESS than the $500,000 tax exemption threshold. In sherrie’s example – IF it was a secondary or investment property, AND the couple mad more than $200,000 per year AND they sold the home for $400,000, then the amount OVER what was paid for the home would be taxable. Let’s say the property was purchased for $300,000, then the capitol gains tax would apply to the $100,000 of profit, OR $3,800 dollars. I hope that helps all to understand a little better.http://www.gop.gov/blog/10/04/08/obamacare-flatlines-obamacare-taxes-home