If I sell my personal residence in 2013, will my gain be subject to the 3.8% additional Medicare tax?
It depends on the amount of your gain, your tax filing status, and your modified adjusted gross income (MAGI). If the gain on the sale qualifies for the home sale exclusion of $250,000 ($500,000 on a joint return), then you don’t have to worry about any additional Medicare tax on the sale. The Patient Protection and Affordable Care Act that created the new Medicare tax did not change the home sale exclusion. However, if you have any gain over the exclusion amount, the excess is treated as investment income for purposes of the tax. You’ll owe the tax only if your MAGI exceeds a threshold amount for your filing status (e.g., over $200,000 if you’re single or $250,000 if you’re married filing jointly).
