Red States, Blue Cities

I’ve been filing my taxes for a couple of decades now, and once upon a time was even a CPA.

Still, I’d never heard the term “SALT deductions” until yesterday (it’s an acronym for “state and local tax deductions”).

Wanna guess what one of the biggest bones of contention in the new (Republican) tax plan is??

Effect on Minneapolis Housing

While Minnesota may not be a classic “blue” state like New York or California, Minneapolis is very much a “blue” city.

That’s because — in addition to its overwhelmingly Democratic politics — local property taxes are one of the last, purely progressive taxes around.

Translation: the property taxes on an $600k Minneapolis home are more than double those on a $300k home, which in turn are already higher than in neighboring cities like Bloomington and Plymouth.

And those gorgeous, estate-like homes on Lake of the Isles in Minneapolis?

They come with property tax bills ranging from $25k to more than $75k!

A year.

Immune:  Top 1%

While I don’t worry about the folks who own those homes — I’m sure they’re otherwise well taken care of in the new tax bill — I do see at least a short-term, umm . . . chill** on Minneapolis homes worth between roughly $500k and $1M.

That’s the price range where annual property taxes exceed $10,000, but prospective Buyers aren’t so well-heeled that they’re indifferent to newly limited SALT deductions.

P.S.: Locals know that winter arrived with a vengeance overnight.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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