How the new Medicare tax applies to rentals

Real Estate Tax Talk

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Starting in 2013, a new 3.8 percent Medicare tax will be imposed on investment and rental income earned by higher-income taxpayers. Funds from the tax will be used to help pay for the nation’s financially troubled Medicare program.

This is a major change in the tax law that will affect many landlords. For higher-income taxpayers, it will make rental property a less attractive investment than it used to be.