Real Estate Related Myths

We live in the era of the internet and the 24 hour news cycle and the combination of the two can either be an amazing blessing or a genuine cause of concern. On one hand, we certainly get information quickly --- on the other hand the actual source of that information is getting harder to determine and the quality of the reporting is becoming more and more questionable.

It’s no longer possible to assume that what you see in “print” is accurate and honest. It’s unfortunate but articles from secondary sources might very well contain carefully researched and thoroughly vetted information but they could just as easily contain conjecture or deliberate misinformation that’s being disseminated for reasons completely unrelated to the subject at hand. 

At the moment, there are two major myths involving the real estate industry that the National Association of Realtors is working hard to refute.

The first claims that the “Cap & Trade” energy bill that’s working its way through Congress will require home sellers to obtain an energy audit and retrofit their properties before they can sell their home. The reality is that the bill only requires new construction to be “energy-labeled” and actually prohibits states from requiring new ratings when a house is resold.

The second myth claims that the new health care bill contains a transfer tax on home sales. The truth is that the bill does impose a 3.8 percent “Medicare tax” on some high-income households with investment income. However, the tax, which goes into effect in 2013, doesn’t even specifically apply to real estate.

It’s a tax on “investment income” that will only be applicable to households with an adjusted gross income of more than $250,000 ($200,000 for individuals). Moreover, courtesy of the capital gains exclusion rule, the tax would only apply to real estate if the net proceeds of a home sale exceeded the exclusion amount of $500,000 ($250,000 for individuals). Even then, it would only apply to the portion that exceeded those levels. Sadly, that’s a threshold that few people need worry about in our current market.

These myths have obviously been promulgated by those specifically opposed to either the energy legislation or the health care bill but the reason that National Association of Realtors has been working hard to refute their claims is because the strategy only adds to the uncertainty and confusion about the marketplace and can potentially retard an already wobbly housing recovery.