The tax will be in addition to all otherwise applicable Federal, state, and local income, transfer, and other taxes. This post focuses on the tax's application to owner-occupied residential property (including single-family homes, condominiums, and cooperative apartments).1 Although the tax is complicated, here are a few simple rules to guide you:
- In general, if an individual's home is sold, the 3.8% tax will be imposed on the gain "recognized" by the seller (and not on the gross purchase price).
- As you are aware, a limited portion of an individual's gain on the sale of a primary residence (generally, $250,000 for a single individual, and $500,000 on a joint return) may not be taxable for ordinary Federal income tax purposes. The same rule applies for purposes of the new tax.
- If the seller's "adjusted gross income" (with certain modifications) is below specified levels (generally, $200,000 for a single individual, or $250,000 on a joint return), the seller may be exempt from the new tax.
1 Different rules may apply to other types of property, including second homes and investment properties.
Source: REBNY Real Estate Board of New York
Contact me at 917-312-0924 to sell your property before January 1, 2013.