An op-ed in last Sunday’s newspaper has triggered house-to-house skirmishing between author Paul Guppy and the Spokane Association of Realtors.
Guppy, vice president for research at the conservative Washington Policy Center, summarized some of the downsides to health care reform, namely its costs. In his recitation, he said middle-class real estate owners will pay a 3.8 percent tax when they sell “even if they are ‘rich’ for only one day – the day they sell their house and buy a new one.”
That would be a tab of about $11,000 for anyone in Spokane fortunate enough to sell a $300,000 home. Add Washington’s 1.28 percent excise tax and Realtor commissions, and away go profits – confirmation the health care reform law is a 2,700-page nightmare.
Rob Higgins, president of the Spokane Association of Realtors, said would-be sellers immediately started calling about the tax and whether they would have to pay it.
The answer, except for a very few, is no.
First, the Medicare tax applies only if the net gain on the sale of a home exceeds $250,000 for an individual, $500,000 for a couple. During first quarter 2010, homeowners grossed less than $250,000 on 83 percent of homes sold. Even at the peak of the market in 2007, 79 percent of homes sold for less than $250,000. Again, that’s the gross.
For the lucky few who have held onto a home long enough to approach the net gain threshold, the tax applies only to the portion that pushed adjusted gross income for the year above $200,000 for an individual, $250,000 for couples.
In the case of a second home, the net gain provision does not apply. The tax starts when the income limits are exceeded.
One more thing: The tax does not kick in until Jan. 1, 2013.
Sara Orrange, government affairs director for the Spokane Realtors, responded with a letter calling Guppy’s representation of the tax “inaccurate,” and seeking a correction.
Guppy stands by his statements, pointing out the segment regarding the home sales tax should be read in the context of his early comments on investment income taxation.
The Realtors, he says, are oversensitive because home sales are down, and they do not want any more information out that will discourage sellers.
True, a little, but members of the real estate community have another reason to be sensitive.
As the National Association of Realtors points out in an excellent summation of the health care reform bill, 28 percent of its 1.2 million members have no health insurance, and many more are underinsured. Those members are an average 54 years old, a population most in need of health care now, or within a few years.
Spokesman Lucien Salvant says the National Association of Realtors worked for years with Democrats and Republicans, liberals and conservatives, to develop legislation that would make insurance available to members.
“This is the first time that opportunity came up,” he says.
Hardly radical, the group stuck to a clear-eyed evaluation of its membership’s best interests and skirmished its way to success.
Subscribe to the Morning Review newsletter
Get the day’s top headlines delivered to your inbox every morning by subscribing to our newsletter