High-End Homeowners Scramble to Sell Before Dec. 31
BOSTON (TheStreet) -- Super-rich home sellers are scrambling to close deals by Dec. 31 to avoid a 3.8% so-called "Obamacare Tax" -- not to mention other tax hikes set to kick in if Washington goes over the "fiscal cliff."
"There's definitely a financial incentive for
High-income taxpayers who sell their homes by Dec. 31 will generally owe just 15% federal capital-gains taxes on their profits, with $500,000 exempt from all U.S. taxes if sellers are married and meet other criteria. (Singles can get $250,000 exemptions.)
Long-term capital-gains tax rates for rich people could jump to as high as 23.8% come New Year's Day, though, costing some extremely wealthy sellers millions.
For instance, Sample is marketing an $85 million Manhattan townhouse whose owner will owe Uncle Sam an extra $4 million if the property sells after Dec. 31 and tax rates soar.
Capital-gains rates are going up partly because of the Obamacare Tax, so named because it will help fund Obama's 2010 health care law.
The levy will boost long-term capital-gains tax rates on home sales to 18.8% for married couples who make an adjusted $250,000 a year or more. (Singles who earn $200,000 and up must also pay the new tax.)
Rates will also rise another 5% on a wider set of taxpayers if politicians fail to avert the "fiscal cliff." That's the set of automatic tax hikes and spending cuts that will kick in Jan. 1 if lawmakers don't reach a deficit-reduction deal by then.
The new taxes shouldn't affect the majority of home sellers, as most have either too little income or home-sale profits to trigger the higher rates.
But the super-rich are another story.
In tony Newport, R.I., Robin Nicholson of Lila Delman Real Estate is aiming to close one multimillion-dollar deal by Dec. 31 and says other clients told her earlier this year to sell before rates rose.
"People realized that it made sense to do certain