Letter to the Verde Independent, August 8, 2010.

Dear Editor: I am compelled to respond to Ms. Lavone Turnipseed's letter to the Editor of Sunday, August 8, entitled "This bill is set to hurt the retiring generation." She repeats the tired old rumor that "under the new health care bill all real estate transactions will be subject to a 3.8% sales tax." Happily, this is simply not true.

Can I give you some hard facts? The facts are that, yes, certain sales by high-income households will be affected by the new Medicare tax, possibly 1-point-five percent of US households. (Not 1-point-five percent of the US population - I said households.) This tax applies only to people with an Adjusted Gross Income (AGI) of $200,000 for a single person or $250,000 for a couple. The tax only kicks in after you take your capital gains exemption.

How about an example? A couple with an AGI above the $250,000 limit sells their primary residence for $2,000,000. They make a $750,000 profit. Capital gains laws protect $500,000 of that $750,000, assuming that they have lived there for 2 out of the past 5 years. The 3.8% tax applies only to the $250,000 left over. Their tax liability under this new Medicare tax is $9500. With all of the problems facing America right now, I'm not going to have a lot of heartburn over the fact that somebody in those income brackets profited $750,000 and had to give Medicare $9500 of it.
Ms. Turnipseed, please don't be embarrassed that you were fooled. Somebody made this up and then published it, and then somebody else repeated it and it has spread like wildfire throughout certain circles.

To read the Health Care bill, go to http://www.huffingtonpost.com/2009/07/15/house-health-care-bill-fu_n_234372.html

To verify my research, go to http://www.factcheck.org/2010/04/a-38-percent-sales-tax-on-your-home/ or
http://www.snopes.com/politics/taxes/realestate.asp or
http://www.realtor.org/small_business_health_coverage.nsf/docfiles/government_affairs_myth_busters.pdf/$FILE/government_affairs_myth_busters.pdf

Thank you,
Carol Anne Warren
2010 President, Sedona Verde Valley Association of REALTORS®
928-300-9031
carolanne@adobegr.com

For fairness' sake, here's Ms. Turnipseed's letter;

8/7/2010 1:29:00 PMLetter: This bill is set to hurt the retiring generation
Editor:Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8 percent sales tax? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to hurt the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff make your November and 2012 vote more important?Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of Clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking.
Lavone Turnipseed Camp Verde