The Affordable Care Act (Obamacare) And Its Additional Provisions, Including Investment Income Tax
Many people don’t realize that there was a lot more to the Affordable Care Act than just affordable health care. With all the hype in the news and across the United States about the Affordable Care Act, the Marketplace, and what is and isn’t being done with our healthcare, some of those other provisions got completely overlooked and/or ignored.
One of those provisions was the Net Investment Income Tax that was included in that. Now according to the act, there was a 3.8 percent tax that took effect on January 1, 2013. This tax applied to individuals, estates, and trusts that have investment income over the threshold amounts.
After having received some comments from the public about the confusing rules and regulations concerning this tax, the IRS released some “final” rules and proposed regulations as it relates to certain types of properties.
Among these rules is a “safe harbor” provision for real estate professionals. It states that if this real estate professional participates in real estate activities for more than 500 hours in a given year that the rental income from these activities can be considered income that occurred in the “ordinary course” of doing business, and as such, would not be subject to this additional tax. This “safe harbor” has requirement tests which simplify whether or not you meet this and can avoid the additional Investment Income Tax.
There are, of course, other exceptions to the rule. So if you want to know whether you qualify for the Investment Income Tax or any other of the additional provisions listed in the Affordable Care Act. Call Taxpectations where you can get your questions answered.