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What you need to know about the SALT property tax deduction


Q: When it comes to the SALT deduction, can you give me a little more information on the limits?

A: In the last big tax bill that Congress passed, the law limits the amount of state and local taxes (SALT) to $10,000. That means that if your real estate property taxes are $10,000 and your state income taxes are $10,000, you will be limited in deduction a grand total of $10,000. If your property taxes are $3,000 and your state income taxes are $5,000, you will get the full benefit of deducting both as the total amount is $8,000 and below the limit of $10,000.

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For taxpayers who do not itemize their deductions, the $10,000 limit on state and local taxes does not matter, but for taxpayers in higher property tax and higher state income tax states and where the taxpayer does itemize his or her deductions, the $10,000 limit will kick in. In one of our previous columns we transposed some of our numbers, and it’s good for us to clarify to our readers that the maximum deduction you can take for your property and state taxes is a total of $10,000.

Q: I read your column “Flipping homes in retirement.” I flipped two homes decades ago, and the last one was in 1993. I didn’t lose money on either, but it was clearly not worth the time, headache and uncertainty.

I worked in the construction business for several years at that time, possessed an electrician's license and knew very well the working end of a shovel, so I had a basic understanding of the process. The old saying "Don't bet the grocery money" rings true in this case, especially for a retiree.

I was in my 30s when I flipped houses, and young enough to recover financially had I experienced a major loss. I am now in my early 60s and would not do it. The competition is too keen and the risk is too great for inexperienced people living on fixed incomes to flip homes.

A: Thank you for your insight. And you’re right. Flipping homes looks easy (not to mention financially rewarding) when you watch shows on TV that glamorize it and give you a sense that anybody can handle the process of buying, upgrading and flipping homes.

More Matters: Make sure you understand all the costs before embarking on home flipping

Our column was an attempt to give a little insight into the process of flipping homes and to give a greater understanding into the process. As you mentioned, if you have the time, money and ability to withstand the process, you might make a go of it. But you better be ready for the downside as well.

We purchased a property years ago with the hope of flipping it. We purchased it as the market was getting red hot and before the Great Recession. It’s now 12 years after we bought it, and we have finally found the right buyer to purchase the home at a price that we liked. We had the ability to weather the storm, rent it and wait until the market improved. Not everybody can do that.

As with any get-rich-quick scheme, if it seems too easy and they say everybody or anybody can do it, it's probably not true. Thanks for your comment.

Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through her website,