One component of the Healthcare Bill that was passed is a new Medicare tax on investment income. Designed to help offset the cost of the overhaul of the healthcare system, a new tax of 3.8% is levied on investment income for individuals reporting more than $200,000 in income, and joint filers earning reporting more than $250,000. The tax will start in 2013, but the far-reaching definition of income is what should catch the attention of both landlords and tenants. Under the bill, investment income includes interest, dividends, annuities, royalties, capital gains, and rents.
Given the timetable for the tax, both landlords and tenants should be aware of the impact this tax could have on their rent, term, and operating expense provisions of their lease.