New real estate tax already kicked in, regardless of fiscal cliff debate
While some uber-wealthy Americans were shaking in their boots awaiting a deal in Washington to avoid the “fiscal cliff,” those who dabble in real estate many have already been pulling out a fountain pen and the company checkbook. According to the Wall Street Journal, those who receive rental income from properties such as apartment buildings, single-family homes and retail shops were hit with an investment surtax of 3.8 percent on January 1.
The so-called Medicare tax, passed as part of the Affordable Healthcare Act in 2010, won’t affect real-estate companies or those who work full-time managing their real-estate portfolio.
The Medicare tax will affect high-earning professionals, such as doctors and lawyers, who invest in real estate on the side, but not real-estate companies or those who manage a real-estate portfolio full time. However, the tax also covers all types of investment income, like dividends, capital gains and interest from banks and bonds, according to the Journal.
“We know for certain the Medicare tax is here to stay,” said Jim Guarino, a partner at MFA-Moody, Famiglietti & Andronico, LLP, an accounting firm in Tewksbury, Mass. “I think there might have been some question if the tax would be a bargaining chip in the fiscal cliff negotiations. It was not.” [WSJ] —Christopher Cameron