By now you have probably heard by now that Congress passed HR 3590, the “Patient Protection and Affordable Care Act”, or to put it more short and to the point, the “health care overhaul”. This law was then signed by the President.

Also passed by the US House of Representatives was HR 4872, the “Health Care and Education Affordability Reconciliation Act of 2010“, which makes changes to HR 3590. To the average person this probably makes no sense. Why pass a bill and then have to pass an amendment right away? Why not fix the original bill? It's all about Politics!! As soon as the President signs HR 3590 into law the Senate will take up debate on HR 4872 and will only need a simple majority (51) of the Senate for passage. If the Senate does approve this bill as written it will then go to the President to be signed into law and will amend the “Patient Protection and Affordable Care Act”. Right now the Republican Party is trying to derail the Amendment.

So what does the Health Care Reform Bills have to do with Real Estate? A lot, because if HR 4872 (the Amendment) becomes law. Real estate (along with most other passive investments) will be taxed to help fund the bill. Nobody is really paying attention to this change and certainly your Politian’s are not bringing it up. The cost for Health Care Reform has to be paid for somehow. By sliding in these provisions it is most likely to affect those that are deemed "wealthy". For only "wealthy" people own Real Estate and would have passive income. This is another clear example of "Wealth Redistribution". Sec. 1402 of the bill, which addresses “Medicare Tax” and states that:

(1) APPLICATION TO INDIVIDUALS.—In the case of an individual, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax equal to 3.8 percent of the lesser of—‘‘(A) net investment income for such taxable year, or ‘‘(B) the excess (if any) of—‘‘(i) the modified adjusted gross income for such taxable year, over ‘‘(ii) the threshold amount.

For people that have passive income from things like real estate, such as rents, they might be subject to Medicare tax on that income, unless, of course, you are under the income threshold amount which is defined in the bill as:

(b) THRESHOLD AMOUNT.—For purposes of this chapter, the term ‘threshold amount’ means—‘‘(1) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $250,000, ‘‘(2) in the case of a married taxpayer (as defined in section 7703) filing a separate return, 1⁄2 of the dollar amount determined under paragraph (1), and ‘‘(3) in any other case, $200,000.

In addition, Obama’s 2011 budget proposes increasing the tax rate on capital gains to 20 percent, from the current 15 percent, for “high-income taxpayers” (defined as couples with 2011 taxable income above $235,450 and single people with income over $194,050). While that might seem like a lot of money to many, it will capture are large amount of people. Especially those that live in high cost areas where wage are higher but so is the cost of living.

Over the next couple of days and weeks we will see how this continues to play out. With death threat to congress personal and heated debates. Statement from the President like, "Go for it!" and "If they want to have that fight, we can have it", it is definitely going to be interesting.