3.8% Medicare Tax on Principal Residence in 2013?


In 2010, Congress passed the Health Care and Education Reconcilation Act (HCERA) which imposed a 3.8% Medicare contribution beginning in 2013 for individuals who have a modified adjusted gross income in excess of $200,000 for single individuals and $250,000 for couples filing joint returns.

There has been some confusion whether this new Medicare contribution tax applies in the case of home sales.

However the new Health Care and Education Reconciliation Act makes no changes to the existing home sale exclusion rules. Single individuals will be able to exclude up to $250,000 and married individuals $500,000 of gain from the sale of their principal residence before the Medicare tax will be calculated.


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