Partially getting around SALT cap

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profet
Posts: 21
Joined: Mon Jun 18, 2018 11:56 am

Partially getting around SALT cap

Post by profet » Thu Jan 10, 2019 9:08 am

So I'm hitting the $10k SALT cap before I even factor in my property taxes.

Is it ok to get around the cap by deducting the percentage of my property taxes that make up my home office on my schedule c?

Jags4186
Posts: 3578
Joined: Wed Jun 18, 2014 7:12 pm

Re: Partially getting around SALT cap

Post by Jags4186 » Thu Jan 10, 2019 9:30 am

I don’t know if anyone can answer this question since this is the first year, however, I would ask what percentage are you using? Your property taxes cover not only the home but the land your home sits on. Are you using 15% of your home as an office or are you using 2% of your property? Are you going to take the percentage of your home used for office and then the percentage of your property’s improvements to total value?

I think you might invite an audit by doing this.

TBillT
Posts: 734
Joined: Sat Sep 17, 2011 1:43 pm

Re: Partially getting around SALT cap

Post by TBillT » Thu Jan 10, 2019 12:33 pm

Some states are developing property tax workarounds, so tell us what state you are working with.

One work around is certain donations which some states give big state tax credts (eg; 65% in Va). But the new IRS rule says you can only deduct the portion of the donation not given credit for. But if you have some nicely appreciated securities to donate, even this could be attractive way to reduce state tax and shift some to the donation deduction category. You could give $10000 to a charity you like and get most of that back in credits and deductions. Until Aug-2018 rule, you could actually make more money making the donation than it cost you make the donation, which was really questionable policy.

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