I am asked frequently if I know the details of the new 3.8% tax on Baton Rouge homes passed in the recent health care bill that takes effect starting in 2013. This was one aspect of the Health Care bill that caused quite a flurry of discussion, misinformation, and outcry. I am summarizing a few points here and linking you to some information sources that will help you familiarize yourself for discussions with your tax accountant.
Will Baton Rouge Homes have an additional tax in 2013? The answer is Yes, some will. But not all. And it did get passed as a Medicare tax in the new Health Care Reform bill.
Baton Rouge Homes that are primary residences won't be affected until the $250,000-$500,000 allowable total profit is reached. But investment properties and second homes and vacation properties will be taxed. And rental income, maybe. The new tax applies to "unearned" net investment income. Unearned income is the income that an individual derives from investing his/her capital. It includes capital gains, rents, dividends and interest income. It also comes from some investments in active businesses if the investor is not an active participant in the business.
As with all tax codes, this new medicare tax is complicated. So it is advisable for all homeowners to study and learn about this new tax, and then discuss it in detail with your tax adviser, before it catches you by surprise in 2013.
The National Association of Realtors and others have answered some of the more common questions.