By Brenda Guerrero

Now that the first wave of tax returns under the new law are in the rearview mirror it’s an opportune time to identify who was Trumped and who Triumphed!  For many,  one of the largest write-offs, State and Local (Sales & Income) Taxes or SALT is now limited to $10,000.  Since the average home in King County is now worth $620,000 and many homes on the Eastside exceed a $1mil., property taxes alone often top the new limit.  So many of you received little to no benefit from paying high sales or out of state income taxes.  Those with vacation or investment property likely lost the benefit of real property taxes as well. 

While the new higher Standard Deduction of $24,000 for married individuals may have softened the blow for some, for most upper income taxpayers, taxes alone often exceeded the $24,000 threshold-- so many of you were Trumped! 

Here are several tips to minimize the SALT limit:

  1. Pay property taxes on time so you don’t lose the deduction from bunching two years of payments into one year’s tax return. 
  2. If you own two homes, consider renting one so you’ll be able to deduct property taxes as a rental expense.
  3. If you paid total property taxes above $10,000 or own investment property, keep a log of any taxes not deducted, you may qualify to add the taxes to the basis of the property to reduce any gain upon sale. 
  4. If the property or other taxes are paid in connection with a trade or business,  they may be deductible by the business.  Be sure to request reimbursement from the business if available. 

I regret to report that the SALT limit took a bite out of my tax refund for 2018;  don’t let it ruin your tax refund.  Plan ahead to restore this valuable deduction.