An often less talked about portion of the massive legislation known as ObamaCare is how the government is going to pay for it. The great majority of the bill pertains to matters that have nothing to do with healthcare. It may surprise you, but some of the needed revenue will come from the sale of real estate – kind of.
Effective January 1, 2013, a new 3.8% tax on investment income will be imposed. This tax does not affect all real estate transactions, only when certain conditions are met.
Here’s what you need to know from a capital gain/real estate perspective:
- Is your AGI greater than $200,000? The 3.8% tax is on the LESSER of your investment income amount or the amount in excess of Adjusted gross income (AGI) over $200,000 (Individual) or $250,000 (Couple). Therefore, if your AGI (which includes real estate sale gains) is less than $200k (or $250k) you are not affected by the new tax.
- Your AGI will include the sale of investment income (or real estate). Say you make $100k salary and sell your vacation home for a profit of $225k – your AGI will be $325k and you’ll be subject to the 3.8% tax on $125k ($325k-200k).
- You get a $500k deduction for the sale of your primary residence. If you sell your primary residence for a gain of $550k, you get to deduct the first $500k and are left with a gain of $50k to be added to your AGI.
- Get an early start. Most markets and businesses open by 9 A.M. Whether you work from home or commute to an office, the more time you’ve had to digest the day’s news, goals and obstacles, the greater advantage you’ll have over your competition.
- Get in the habit of exercising. Other than the obvious health benefits, movement increases brain function and decreases stress levels. Developing a consistent habit of exercising is a discipline which will carry over into your business day – Apple CEO, Tim Cook, is in the gym by 5 A.M. every morning! Excellent read: The Power of Habit: Why We Do What We Do in Life and Business.
- Make a to-do list. Lists are a great way to keep yourself on track and visually aware of your goals for the day. Getting in the habit of prioritizing key tasks and identifying less urgent matters is a great way to decrease stress and increase your efficiency. Literally crossing matters off a list will help to put issues behind you and move on to the next task at hand.
- Stay informed. Whether you prefer National Public Radio or the Wall Street Journal, start the day by hearing about what is going on in the world. Whether you’re looking for inspiration or just conversation points for clients and co-workers, being well informed is always a positive. Staying informed is a key contributor in achieving the 10 Easy Tricks to an Increased Net Worth in 10 Years.
Being stuck in a dead end job can be one of the most debilitating and stressful situations one can face in their life. The sad part is most of us know when we’re trapped in such a situation but choose the unproductive sanctity of the familiar rather than the short term discomfort of change. The hardest thing to do is acknowledge and accept that it’s in your best interest to ditch the comfortable and move on and grow as a person. Get out of your comfort zone and start that business or switch jobs to try out something new.
Here are 7 reasons why you’re strong (and smart) enough to survive short-term discomfort and change your situation:
- You’ve learned that money does not equal happiness. For most people, it’ll take a lifetime of failed relationships, poor health and lack of real achievement to realize that amassing money should never have been the goal. The goal should have been to be truly happy. Happiness is achieved through meaningful relationships and by realizing one’s potential – not through short-term emotional highs or sticking with an unfulfilling job just because it will make a couple hundred dollars more per month. Don’t be afraid to trade your higher salary for a happier existence.
- You’ve realized that you’re no longer learning. Stress and anxiety levels decrease when you’re learning new tasks – not to mention you’re growing as a person. When you’ve acknowledged that the monotony and replication of a job is negatively affecting you, you’ve taken the first step to motivating yourself to move on and seek person grow elsewhere. Life is too short, get out there, open your mind and learn new things!
- You’ve embraced the fact that nothing worthwhile comes easy. Sure, most of us think that it would be great to win the lottery or inherit a huge sum of money. The fact is that real personal satisfaction comes from hard work and savings, not luck or gifts. When you were a kid you’d save up for weeks or months to buy that toy/used car/computer you researched so much – appreciating every detail and facet of it. It’s the hard work, growing and achievement that will lead to happiness. Don’t avoid things that are ‘hard’ – look at them as goals which, when accomplished, will lead to feelings of self-worth.