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& Associates

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Mark Malachowski
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870 Market Street
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San Francisco, CA 94102

(415) 983-0717


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San Francisco Estate, Business, and Investor Immigration Law Blog

Minimizing the Impact of the Obamacare Surtax on Investment Income

Obamacare's 3.8% surtax on investment income applies to individuals making more than $200,000 adjusted annual income.

With top capital gains tax rates having recently increased from 15% to 20% for individuals with incomes of more $400,000 per year, investors may now be facing a 23.8% tax on net investment income.

This is a fifty-eight percent increase from 2012 tax rates.

A Charitable Remainder Trust may useful in minimizing the impact of this surtax using property that has appreciated.

  • Once the property has been transferred to the trust, it is sold and the proceeds paid out in annual payments of at least 5% of the trust's initial value.
  • The value of the trust at the Trustor's death then goes to the selected charity.
  • The tax advantage is that the trust can sell the appreciated property without incurring the 3.8% Obamacare tax. The beneficiaries are still subject to capital gains owed, but the smaller payments taxed will be spread over a longer period of time.