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Tax Law (Questions About Taxes)/Tax Question Re; Lease/Purchase

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Question
"I own a home that is paid in full. I have been offered a sales agreement where the party agrees to a 20 year lease purchase agreement.

Due to the new sale of home taxes for 2013, will I be charged any of the 2013 Surcharge tax on this transaction or would I be charged this surcharge on each month lease payments... or is there another scenario as to the taxes.

Thank you.

Russ"

Answer
Russ,

Thanks for your question.  It is not a sale of home tax, but is broader than that.

The 3.8% additional Medicare tax applies to taxpayers with adjusted gross incomes in excess of $200,000 ($250,000 married filing jointly).  This tax is levied on the gain from the sale of unearned income such as interest, dividends, rents, and capital gains.

If you exceed the income threshold, you would be subject to the tax on the sale of the home on the portion that is in excess of the exclusion for the sale of your primary residence (assuming this house qualifies as your primary residence).

The tax is imposed on the lesser of net investment income or the excess of AGI over the previously mentioned thresholds. In the event of an instalment sale, the tax would apply to net investment income reported each year.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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