If you’re a homeowner — or thinking about becoming one — there’s some exciting news out of Washington that could directly impact your bottom line.
The federal cap on the SALT (State and Local Tax) deduction has officially increased from $10,000 to $40,000 for married couples filing jointly, and $20,000 for single filers. This is a significant change, especially for those of us living in high-tax states like California, where property taxes and state income taxes are a major consideration in overall affordability.
What Is the SALT Deduction?
The SALT deduction allows taxpayers to deduct certain state and local taxes — including property taxes and either income or sales taxes — from their federal taxable income.
Until now, this deduction was capped at $10,000, a limit that many argued disproportionately impacted residents in higher-cost areas with larger tax burdens. The new cap is a meaningful shift, offering more room to deduct and potentially lowering your federal tax bill by thousands of dollars.
Why This Matters for Homeowners and Buyers
This update could have a ripple effect throughout the real estate market. Here's how:
More Tax Savings: Homeowners with higher property taxes or income taxes will now be able to deduct significantly more, lowering their overall tax liability.
Improved Affordability: For buyers, this could make owning a home more financially appealing, especially in desirable but high-tax communities.
Increased Confidence: Sellers may benefit from a broader buyer pool, while buyers may feel more empowered knowing the tax benefits of homeownership have increased.
Market Movement: This policy shift could lead to greater activity in mid-to-high priced markets, especially where the previous cap had discouraged potential buyers.
What You Should Do Next
If you’ve been on the fence about making a move, this is a great time to reevaluate. Whether you're thinking of buying your first home, upgrading, or selling and cashing in on your equity, the expanded SALT deduction could make a meaningful difference in your strategy.
Want to know how this change could impact your personal tax situation or your next real estate decision? I’m here to help. Let’s connect and talk through the numbers — no pressure, just straight answers.
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