Carina Woolrich, Advantage Chatuge Realty

Featured Listings

Mountain Meadows Lot on Shooting Creek 269768

$34,900.00
0 Bdrm, 0.00 Bath
Lot 6 Mountain Meadows
Hayesville, North Carolina 28904

Hiwassee River Front Acreage 262672

$149,900.00
0 Bdrm, 0.00 Bath
Lot 1 Loop Trail
Hayesville, North Carolina 28904

Hiwassee River Front Lot 262674

$59,900.00
0 Bdrm, 0.00 Bath
Lot 6 Riverbend Trail
Hayesville, North Carolina 28904

Golf Course Lot in The Ridges 264322

$44,900.00
0 Bdrm, 0.00 Bath
Lot 71 A Licklog Ridge
Hayesville, NC 28904

Hiwassee River View Cabin

$320,000.00
2 Bdrm, 2.00 Bath
226 Riverbend Dr.
Hayesville, NC 28904

Sunset Bay Condo 290588

$327,500.00
3 Bdrm, 3.00 Bath
1419 Lakeside Rd #604
Hiawassee, Georgia 30546

Mountain Chalet in Warne 291160

$169,900.00
2 Bdrm, 2.50 Bath
3 Lost Indian Trail
Warne, North Carolina 28909

Hayesville Mountain View Cabin 291493

$265,000.00
3 Bdrm, 3.00 Bath
242 Cabin Dr.
Hayesville, North Carolina 28904

Smokerise Cabin 291489

$197,500.00
2 Bdrm, 3.00 Bath
1014 Smokerise Dr.
Hayesville, NC 28904

About Us

EMAIL  Carina

706-994-6626 Direct 
828-389-4466 Office

Carina Woolrich, Realtor

Hi, I'm Carina Woolrich. I live in Hayesville, NC because I love the area and the people; the mountains and the water. I'm here to help you with all of your real estate needs, whether it's finding your dream home or selling the one you already have. I look forward to assisting you and helping you discover the treasures of the North Georgia and Western North Carolina Mountains!

Please email me or call me with any questions, any time.

Licenced as a Broker in N.C. Associate Broker in GA.

Leatherwood Falls, Fires Creek Wildlife Management Area, Hayesville, NC
Leatherwood falls, Fires Creek, Hayesville, NC

Historic Courthouse on the Hayesville Square
Historic Courthouse on the square in Hayesville, NC

Hiwassee River Sunset
Hiwassee River Sunset

Lake Chatuge, Hayesville NC and Hiawassee GA
Lake Chatuge, Hayesville NC

Bald Eagle on the Hiwassee River
Bald Eagle, Hiwassee River

Hiwassee River Hayesville NC Winter
Hiwassee River, Hayesville NC

Winter 2011. Hayesville NC
Winter 2011, Hayesville NC

 

Carina Woolrich
E-Pro
Advantage Chatuge Realty
706-994-6626 Cell
828-389-4466 Office

NC Lic. 262250
GA Lic. 339775

Firm License:
NC: C-12810
GA: H-45490

The Truth About The New 3.8% Tax on Real Estate Transactions Found in the Health Care Bill

July 23, 2012, 9:07 am

There have been a lot of rumors going around the Internet about the new 3.8% capital gains tax in the Health Care Bill also known as "Obamacare". I have received e-mails stating that the 3.8% tax will be on all real estate transactions with examples such as "if you sell your home for $100,000.00, you will owe $3800.00 in taxes, and if you sell your home for $300,000.00 you will owe $11,400.00. I have to agree that if it were true it would be devastating to the housing market, but it's not. This went around the Internet 1 1/2 years ago so I did the research on it then. It seems to be circulating again because of the upcoming presidential election. The Northeast Georgia Board of Realtors has posted this on our MLS to clarify the way it works. It's a whole lot better than the way I've been trying to explain it so I'm re-posting what they've written.

From the Northeast Georgia Board of Realtors:

The Board Office has been contacted numerous times about the 3.8% tax that everyone is talking about, receiving emails about and seeing on Facebook, so rather than continue to write individual emails we've decided to post this notice so that you might better understand what the tax really involves. The following information came from GAR.

There has been a great deal of misinformation on the 3.8% medicare tax in the Health Care Bill. There is NOT a 3.8% tax on all real estate transactions beginning in 2013. However, there is a new 3.8% tax on high income earners (Those with annual Adjusted Gross Income of $200,000+ for an individual & $250,000+ for couples) but only on unearned income (dividends, capital gains, rental income, etc.) over the AGI limits. Please keep in mind the capital gains tax exemptions remain ($250,000 for an individual, $500,000 for a married couple) for selling a primary residence.

To clear up the misinformation that is being distributed amongst membership, NAR has put together a "Myth Busters" document to clear up the confusion. This link takes you to NAR's notice concerning this matter. The link above can be found on the GAR website under Advocacy/Current Issues/Healthcare reform FAQ

This topic will also be included in the latest version of GAR's Legislative Link newsletter coming out soon.

Below is a document prepared by NAR tax analyst Linda Gould that provides real world examples:

 

NEW TAX ON INVESTMENT INCOME

Effective January 1, 2013

Basics:

Tax Rate: 3.8% (0.038)

Applies to: Individuals with adjusted gross income (AGI) above $200,000. Couples filing a joint return with more than $250,000 AGI.

Types of Income: Interest, dividends, rents (less expenses), capital gains (less capital losses)

 

Formula:

The new tax applies to the LESSER of:

Investment income amount

Excess of AGI over the $200,000 or $250,000 amount

 

Examples:

 

Capital Gain: Sale of a Principal Residence

John and Mary sold their principal residence and realized a gain of $525,000. They have $325,000 Adjusted Gross Income (before adding taxable gain). The tax applies as follows:

AGI before taxable gain $325,000

Gain on sale of Residence $525,000

Taxable Gain (added to AGI) $ 25,000 ($525,000 - $500,000)

New AGI $350,000 ($325,000 + $25,000 taxable gain)

Excess of AGI over $250,000 $100,000 ($350,000 - $250,000)

Lesser amount (Taxable) $ 25,000 (Taxable gain)

Tax due $950 ($25,000 x 0.038)

Comment: If John and Mary had a gain of less than $500,000 on the sale of their residence, none of that gain would be subject to the 3.8% tax. Whether they paid the 3/8% tax would depend on the other components of their AGI.

 

Capital Gain: Sale of a Non-real Estate Asset

Barry and Michelle inherited capital assets that they have decided to liquidate. The sale of the assets generates a capital gain of $120,000. Their AGI before the gain is $140,000. They will pay the tax as follows:

AGI before capital gain $140,000

Gain on sale of assets $120,000

New AGI $260,000

Excess of AGI over $250,000 $10,000 ($260,000 - $250,000)

Lesser amount (Taxable) $10,000 (AGI Excess)

Tax due $380

Comment: In this example, only $10,000 of their capital gain is subject to the 3.8% tax. If their gain had been smaller (less than $110,000), they would not pay the $3.8% tax because their AGI would be less than $250,000.

 

Capital Gains, Interest and Dividends: Securities

Harry and Sally have substantial income from their securities investments. Their AGI before including that income is $190,000. Their investment income is as follows:

Interest Income (Bonds, CDs) $60,000

Dividend Income $75,000

Capital Gains $10,000

Total Investment Income $145,000

New AGI $335,000 ($190,000 + $145,000)

Excess of AGI over $250,000 $ 85,000 ($335,000 - $250,000)

Lesser amount (Taxable) $ 85,000 (AGI excess)

Tax Due $ 3,230 ($85,000 x .038)

 

Rental Income: Income Sources Including Real Estate Investment Income

Hank has a day job from which he earns $85,000 a year. He owns several small apartment units and receives gross rents of $130,000. He also has expenses related to that income.

AGI before rents $85,000

Gross Rents $130,000

Expenses (including depreciation) $110,000

Net Rents $20,000

New AGI $105,000 ($85,000 + net rents)

Excess of AGI over $200,000 $0

Taxable amount $0

Tax due $0

Comment: Even though Hanks combined gross rents and day job earnings exceed $200,000, he will not be subject to the 3.8% tax.

 

Rental Income: Rental Income as Sole Source of Earnings Real Estate Trade or Business

Henriettas sole livelihood is derived from owning and operating commercial buildings. Her income stream is as follows:

Gross rents $750,000

Expenses (including depreciation) $520,000

Net rents $230,000

AGI (net rental income) $230,000

Excess of AGI over $200,000 $ 30,000

Taxable amount $0

Because Henriettas rental income is from a trade or business and therefore not treated as investment income, she is NOT subject to the 3.8% investment income tax.

Comment: Henrietta IS subject to the new 0.9 tax on earned income, however, because some portion of the net rents represents her compensation for operating the commercial buildings.

For this example, assume that the total net rents are her sole compensation. The tax on this earned income would be as follows:

AGI $230,000

Excess of AGI over $200,000 $30,000

Tax due $270 ($30,000 x .009)

Comment: Depending on how Henrietta has organized her business (S Corp, LLC or sole proprietor), she might be able to pay herself $175,000, leaving the remaining $55,000 in the business in anticipation of making improvements the following year. In that case, because her AGI of $175,000 is less than $200,000, she will owe neither the unearned income tax (3.8%) nor the earned income tax (0.9%).

 

Sale of a Second Home with No Rental Use (or no more than 14 days rental)

The Bridgers own a vacation home that they purchased for $275,000. They have never rented it to others. They sell it for $335,000. In the year of sale they also have earned income from other sources of $225,000. The 3.8% tax applies as follows:

Gain on sale of vacation home $60,000 ($335,000 - $275,000)

Income from other sources $225,000

AGI $285,000 ($60,000 + $225,000)

Excess of AGI over $250,000 $35,000 ($285,000 $250,000)

Capital Gain $60,000

Taxable (Lesser) Amount $35,000

Tax Due $1330

Comment: If the Bridgers rent the home for 14 or fewer days in the course of a year, the rental income is non-taxable and the results in the year of sale will be the same as shown above. If the rental period exceeds 14 days in any year, then the rental income (less expenses) will be taxable and AGI would include not only the capital gain, but also some amount that is depreciation recapture. (See example below.)

 

Sale of an Investment Property (Residential or Commercial)

In 2010, Ethan inherited a four-plex investment property from his great aunt. She had used it for many years as an investment rental property in San Francisco. At the time of her death, the adjusted basis of the property was $10,000. During her period of ownership, she had taken $240,000 of depreciation deductions on it. Its fair market value was $900,000 when she died. Because there was no estate tax for 2010 and because carryover basis was in effect, Ethans basis in the inherited property is also $10,000. The prior depreciation allowances carry over to him, as well. He continues to use the property as an investment rental property.

In 2015, Ethan sells the property for $1.2 million. He is single and reports Schedule C income of $180,000. The 3.8% tax will affect Ethan as follows:

Gain on Sale $1,190,000 ($1.2 million - $10,000)

Depreciation Recapture $240,000 (From Great Aunt)

Depreciation Recapture $2,200 (Ethan -- approximate)

Total Gain $1,432,200

Schedule C Income $ 180,000

Adjusted Gross Income $1,612,200 (Gain + Schedule C)

Excess over $200,000 $1,412,200

Taxable Amount $1,412,200

Tax Due $54,664

Comment: If Ethan had inherited the property in a year when stepped-up basis was in effect, his basis would have been $900,000. The capital gain in this example would have been only $300,000. Ethan would not have been responsible for his great aunts depreciation recapture amount. His own depreciation recapture amount would have been based on depreciation allowances on a basis of $900,000 rather than $10,000. Thus, while he would still have been liable for the 3.8% tax, the amount of tax would be substantially smaller. (Exclusive of any depreciation recapture amount, the tax due would be $10,640. His capital gain would have been $300,000.) The results would be the same if Ethan had purchased the property for $900,000.


 

Posted by Carina Woolrich, from the Northeast Georgia Board of Realtors at 9:07 am