Retail Investors Win: New SALT Deduction Rules Could Supercharge Your Cash Flow
Marc Perlof • September 8, 2025
Hey, Retail Real Estate Rockstars!
The Big Beautiful Bill (H.R. 1) has completely changed the rules for State and Local Taxes (SALT), which is great news for any property owner who has ever cringed when they see their tax bill.
For those of you investing in retail real estate, this is the kind of victory that calls for a double espresso and a fresh pro forma. We're talking about actual tax relief in 2025. Let's dissect it.
What Just Happened?
The SALT deduction cap, once stuck at $10,000 per household, has officially increased to $40,000 for joint filers and $20,000 for single filers — but only between 2025 and 2029. After that, it’s back to the old cap unless Congress re-ups¹.
Important Clarification for Property Owners
While the IRS frames the new SALT cap in terms of individual filers ($20,000 single / $40,000 joint), the impact depends on how your retail property is owned:
- LLCs, Partnerships, and S-Corporations (Pass-Throughs): Income, expenses, and property taxes flow through to the owners’ personal returns. The higher SALT cap allows greater deductions here, boosting post-tax cash flow for the individual owners.
- Trusts & Estates: Similar pass-through treatment, meaning beneficiaries or trustees may capture the benefit depending on structure.
- C-Corporations: The SALT cap generally doesn’t apply, since corporate taxes are calculated differently and deductions follow corporate rules.
- REITs (Public or Private): REITs have their own tax regime, but shareholders who receive pass-through income may benefit at the individual level.
- Direct Individual Ownership: If you hold the property in your own name, property taxes fall directly under the SALT deduction rules.
If you live in a high-tax state like California, New York, or New Jersey, this means you can deduct a lot more of your state income, property, and local sales taxes on your federal returns.
Why Retail Property Owners Should Care
- More Deductible Property Taxes
You can lower your taxable income on your federal return by deducting a larger portion of your high property taxes on retail assets. - Boosts Post-Tax Cash Flow
Increased deductions = less tax paid = more cash in your pocket. - Offsets Reassessment or NNN CAM Spikes
With inflation and property tax reassessments squeezing margins, this SALT cap increase gives you some room to breathe¹. - Attractive to High-Income Buyers
New investors seeking tax efficiency may find your retail property more alluring if you offer larger deductions. - Strategic Planning Window: 2025–2029
These changes expire after 2029, so use this window wisely — structure sales, 1031 exchanges, or renovations when you can best leverage the deduction bump¹.
Real Data, Real Impact
- The original SALT cap from the 2017 Tax Cuts and Jobs Act was projected to cost Californians alone over $12 billion in lost deductions annually².
- Nearly 30% of households in high-cost areas maxed out the previous SALT deduction limit².
What About NNN Leases?
Here’s the twist: if your property is on a triple-net (NNN) lease, your tenants — not you — pay the property taxes.
- For Landlords: The SALT cap change doesn’t directly benefit you, since you aren’t the one writing the property tax check.
- For Tenants: They may be able to deduct more of those property taxes on their federal returns, depending on how their business or personal tax filings are structured¹.
Smart Move: Share this info with your tenants.
Suggested Subject Line for Tenant Email:
“You May Benefit from New Tax Deduction Rules (H.R. 1)”
A simple note saying,
“The new federal tax law (H.R. 1) increased the SALT deduction cap for 2025–2029. Since you pay property taxes under your NNN lease, this may be relevant for your tax planning. Please confirm with your CPA.”
That small gesture positions you as knowledgeable, supportive, and proactive — which builds goodwill and strengthens tenant relationships.
If you’re considering a sale, refinance, or exchange between now and 2029, let’s talk strategy while this deduction window is wide open
#RetailRealEstate #CommercialRealEstate #TaxStrategy #SALTdeduction #PropertyOwners
Footnotes & Sources
This blog post is provided for educational purposes only and does not constitute legal, tax, or financial advice. Retail property owners and tenants should consult with their CPA, tax advisor, or attorney to understand how the SALT deduction changes under H.R. 1 apply to their specific situation.
© 2025 Marc Perlof Group. All rights reserved.
Retail Real Estate 2026: Why Some Properties Stay Strong While Others Struggle By Marc Perlof | MarcRetailGuy February 2, 2026 If you own retail real estate, here is what just changed. Retail real estate in 2026 is no longer one market. It has split into clear winners and clear losers. Owners who understand this are protecting value. Owners who do not are feeling pressure. The biggest change is how people spend money when things feel uncertain. Interest rates are higher. Costs are up. Households are more careful. That shift shows up first at the property level. Some retail feels stress faster than others. Lifestyle centers, nightlife areas, entertainment districts, and tourist retail depend on optional spending. When people cut back, visits drop. Sales slow. Tenants push back on rent. Vacancies last longer. This is not a crash. It is a pressure issue tied to spending people can delay. Other retail performs differently. Grocery anchored centers, pharmacies, medical and dental, quick-service food, auto service, and personal care are built around daily habits. People cut wants before needs. That makes income steadier and easier to support in a cautious market. Recent retail market reports show this split clearly. National retail vacancy stayed fairly stable through late 2025, mostly in the mid-5 percent to high-6 percent range, with necessity-based centers performing better than discretionary locations¹. Leasing slowed in 2025, with longer decision times and more rent pushback, especially from non-essential tenants². Buyers are still active, but they are more careful. They now focus on tenant quality, lease length, and operating costs more than rent growth³. What retail owners should focus on right now • Daily-needs tenants reduce risk. Properties with grocery, medical, pharmacy, and quick-service food see more stable rent and fewer concession requests. That helps protect sale price and lender support in slower markets¹. • Grocery-anchored centers sell faster. Buyers still want these assets because traffic is predictable and costs are easier to pass through. These deals tend to fall apart less often³. • Discretionary retail carries pricing risk. Properties tied to optional spending face longer vacancies, rent resistance at renewal, and wider gaps between buyer and seller pricing. Waiting too long to adjust can hurt value, not just cash flow². One thing is becoming clear in early 2026. The market is not pricing retail as one category anymore. It is pricing risk. Two properties with the same income can be worth very different amounts based on tenant mix, lease terms, and rising expenses. Owners who understand this protect equity. Others only see the gap after a buyer or lender points it out. The takeaway is simple. Retail real estate in 2026 is about quality, not hype. Stable income matters. Lease terms matter. Tenant mix matters. Insurance and operating costs matter. Owners who match strategy to how their tenants actually perform stay in control. Owners who rely on old assumptions end up reacting. If you want a clear, property-specific review of how buyers and lenders would view your retail asset today, I can prepare a short market positioning summary. No templates. No guesses. Just how your property would really trade in this market. Ask yourself this. Is your property built around spending people can delay, or spending they rely on every week? #RetailRealEstate2026 #RetailMarketOutlook #EssentialServicesRetail #GroceryAnchoredRetailCenters #DiscretionaryRetailProperties
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By Marc Perlof | MarcRetailGuy January 26, 2026 If you own retail real estate, here’s what just changed for you. 2026 is shaping up to be a year where retail property owners need to pay attention. Not to fear. Not to headlines. To real signals in the market. There is more global and domestic uncertainty right now. Conflicts overseas, trade tension, higher government debt, and political changes in the U.S. all affect interest rates, insurance markets, and investor behavior. This does not mean panic. It means owners need clear, reliable information. Here is where the retail market stands today. Local retail remained steady through late 2025. In Los Angeles County, vacancy ranged from about 5.6 to 6.9 percent in the second half of the year¹²³. That tells us demand is still healthy, even as some tenants adjust space needs or renew leases at new rent levels. Leasing activity slowed in some areas. Spaces are taking longer to fill, and asking rents softened slightly as owners and tenants reset pricing². This is a normal market adjustment, not a collapse. On the investment side, commercial real estate transactions increased nationally through mid 2025. Both the number of deals and total dollar volume rose, showing capital is still moving⁵. Buyers are active when pricing reflects today’s risks and returns. This is exactly what I am seeing in live pricing discussions and negotiations right now. Insurance remains one of the biggest issues for retail owners. Property insurance markets became more stable in 2025, and rate increases slowed in some areas. However, insurers are still selective. Coverage terms matter more than ever, especially for properties exposed to wildfire or coastal risk⁴. Insurance costs directly affect net income, lease negotiations, and buyer interest. Retail Outlook for Q1 and Q2 2026 In early 2026, the retail market is likely to stay steady but measured. Vacancy is expected to remain near current levels. Leasing will be deliberate, not rushed. Rents should hold close to where they ended in 2025 as owners and tenants continue to agree on realistic pricing. Capital will remain active for properties with solid income, strong tenant credit, and durable lease terms. Buyers are selective, but they are still moving forward when risk and return are properly aligned. Insurance markets will stay selective in the first half of 2026. Owners need to plan renewals carefully and understand how insurance affects operating costs, tenant negotiations, and future sale value. Here is a simple retail risk check for 2026: • Local vacancy around 6 percent, stable but uneven by location¹ • Leasing takes longer than peak years, making pricing discipline critical² • Capital remains active, but underwriting is conservative⁵ • Insurance coverage is improving in some areas, but terms still matter⁴ Not all retail performs the same. Discretionary-driven destinations like lifestyle centers, nightlife districts, and tourist-focused shopping streets feel more pressure when consumer spending slows. Retail that serves daily needs and essential services tends to perform better during uncertain cycles. The best strategy now is disciplined and data-driven. Focus on tenant credit strength. Protect lease term and income stability. Price based on real market data. Understand insurance risk clearly. This is how value is protected in changing markets. I help retail property owners position assets based on real tenant behavior and real buyer demand. Not headlines. Call or DM me if you want a clear view of how your retail property should be positioned for 2026. How will you adjust your leasing or investment strategy this year based on what the market is actually telling us? #RetailRealEstate #LosAngelesCRE #CommercialRealEstateOutlook #RetailInvestment #CRE2026 #MarcRetailGuy
