With the primary health care bill – the Patient Protection and Affordable Care Act signed into law by President Obama (PL 111-148) on March 23 – the House and Senate took up an amendment bill to make a number of health-related financing and revenue changes to health care reform legislation.
Three significant tax increases that are of interest to apartment owners were included in the amendment package that was passed by Congress on March 26. They include:
- A new 3.8 percent Medicare tax on unearned income that, beginning in 2013, would apply to all unearned income including net rents (primarily the amount shown on a Form 1040 for income from Schedule E) and capital gains attributable to property dispositions, but will not apply if the income is derived from a “trade or business” unless that trade or business is a passive activity. The tax would be applied to modified adjusted gross income over $250,000 for joint return taxpayers ($200,000 for most other taxpayers, including estates and trusts).
- An increase in the FICA-HI tax for wages (including self-employment income) in excess of $250,000 (married filing jointly) or $200,000 (in most other cases).
- Increased reporting requirements for businesses.