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The additional 3.8% Medicare contribution tax on investment income is for taxpayers whose adjusted gross income (AGI) exceeds $200,000 (or $250,000 if married filing jointly). Investment income is defined as interest, dividends, annuities, royalties, rents, passive business income, and gains from dispositions of property (other than property used in a trade or business, excluding passive businesses).

What does this mean if you sell your main home?

If you sell your main home, the $250,000 (or $500,000 if married filing jointly) capital gain exclusion still applies. However, if you have a net gain to report on Schedule D Capital Gains and Losses, and your AGI exceeds $200,000 (or $250,000 if married filing jointly), then you may be assessed a 3.8% Medicare contribution tax in addition to the income tax calculated on Form 1040 U.S. Individual Income Tax Return .

The assessment of this tax is outlined in detail in Chapter 2A - Unearned Income Medicare Contribution of the Health Care and Education Reconciliation Act of 2010.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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