Starting next year, if you sell your house, the government may want in on the action.
As part of the Patient Protection and Affordable Care Act (ACA), also known as "Obamacare," what essentially amounts to a sales tax may be placed on anyone who sells an asset.
The new law mandates that Medicare taxes on annual income of $200,000 single or $250,000 married jumps from 2.9 to 3.8 percent. That applies on a total of anything that would generate capital gains treatment – stocks, real estate, anything held for one year or longer.
"Let's say your income is $30,000 per year, but you sell your home and make a profit of $300,000," said District 4 U.S. Congressman John Fleming. "Then you're going to be taxed additionally at that 3.8 percent."
This tax is one of the 18 new taxes and penalties designed to generate $836 billion that will help finance ACA. A decade of Medicare cuts totaling $716 billion will also be made in order to help fund the legislation.
Fleming said "Obamacare" will still add $300 billion to the national debt.
"And that's conservative, we think it will be much higher than that because they're underestimating the demand on resources," said Fleming. "So after all the new taxes and gutting medicare, it will still add to the debt."
But before you start raising the price of your home on the market, Fleming is quick to note that 3.8 percent tax on the profit does not apply if the income (annual salary plus profit on asset sale) falls below that $200,000/$250,000 limit.
It also does not apply if a seller turns around and buys a home of equal or greater value.
"If you sell your home and buy a home of same or higher value, a type of homestead exemption where profits can be rolled over is applied," said Fleming.
Aimed at the wealthy, this tax affects people who have a second home, sell an office building, or sell an apartment complex. However, this tax still creates an indirect tax on the middle class, according to Fleming.
"In the short term, any time an apartment complex is sold, that tax burden trickles down to the people paying rent. When a business complex is sold, it trickles down to those business renting office space," he explained. "And that lends itself to higher costs for consumers."
Fleming believes in the long term, this tax will trickle down to the middle class because it is not indexed for inflation.
"Even though inflation is low, when this economy picks up, inflation will take off," said Fleming. "What is now a $60,000 annual income will some day be a $200,000 income with same buying power as before. Over time, inflation takes you into those income regions and that's when the middle class ends up paying it."
He noted the Stelly Tax was intended for the wealthy and eventually caught up with the middle class until it was repealed in 2002. On the federal level, the IRS' Alternative Minimum Tax targeted tax shelters for the wealthy and is now hitting middle class wallets.
"You have to beware," said Fleming. "It's always nice thing to tax someone else, but it can boomerang on you."
He said that republicans on Capitol Hill are ready to throw out the ACA and start over with a "real reform" that would not add to the national debt or tax the middle class.
"We'll repeal it. All we need is (Republican Presidential Nominee) Mitt Romney in office and that thing is gone," said Fleming.
Fleming lists all of the new taxes and penalties that will result from ACA, as well as a timetable for their enactment, online at blog.heritage.org/2012/08/20/obamacares-18-new-tax-hikes/.