A lot of confusing, conflicting and sometimes erroneous information has been circulating about the new 3.8 percent Medicare tax that goes into effect on January 1, 2013, and its effects on real estate transactions. This tax is a part of The Patient Protection and Affordable Care Act, which imposes an additional 0.9 percent Medicare tax on wages and self employment income and a 3.8 percent Medicare contribution tax. The idea behind the tax is that money raised by it will help fund Medicare, and it's touted as a means to supplement the cost of that program. What has people in a tizzy is that the tax may subject real estate transactions to the 3.8 percent tax for anyone who is single with a modified adjusted gross income (MAGI) exceeding $200,000 (or $250,000 if married).
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