Net Investment Tax
What was once called the 3.8% Medicare Tax is now called the “Net Investment Tax”. As we noted in our article “What Is the Tax Impact of Sale”, selling an investment or business property may cause you to pay the 3.8% tax. While doing a 1031 exchange will defer the gain.
This tax was initially called the 3.8% Medicare tax, but not a cent of the tax was helping to fund Medicare. While still 3.8% it is now called the ‘Net Investment Income Tax”. The IRS just published “IRS Tax Tips 2015-27” to help you determine if the tax applies to you.
Remember, if you do a 1031 exchange there is no gain to tax.