What Is The 3.8% Net Investment Tax?

How the 3.8% Net Investment Tax may affect you when selling investment property?

 

A lot of people have been talking about the 3.8% Net Investment Tax that went into effect at the beginning of 2013. This tax basically applies to anyone with investment income, which includes gains on the sale of investment property, who also exceeds the statutory adjusted gross income (AGI) thresholds. Currently, AGI thresholds are $250k for married filing jointly and $200k if you're single. The tax is applied to the lesser of your investment income or the amount your actual AGI exceeds the AGI threshold. For instance, if you're married filing jointly, and your AGI is $300k and you had $40k in investment income, you'd pay 3.8% multiplied by the lesser amount of the two, which is your $40k investment income.

Always consult a CPA or Tax Advisor to make sure you fully understand all implications specific too  your situation before making any decisions.