Who’s prepaying their property taxes?

[fairchaser]

Those of you who can itemize their deductions this year, probably won’t next year since the new tax bill will double the standard deduction to $24000. Consult your tax professional but I prepaid my property taxes today so that I can add these to this year’s deductions. I figure it saved me over a $1,000.

 

[Jon54]

Did you pay the remaining ‘17 taxes or ‘18?

 

[pass-thru]

I thought about this but my understanding is that alternative minimum tax makes it moot anyway.

There is so much conflicting information out there it makes my head spin. For instance, do state taxes have to be paid before Jan 1st to be deductible for the year? I always thought my accountant deducts them and I always the in April. I am screwing myself by not having them paid before Jan 1st?

I have not heard a peep from my accountant. I'm not sure if that means I'm good or if I'm screwed and need to find a new accountant.

 

[Dan Boone]

Property taxes must be paid AND assessed in 2017 to be deductible in 2017, per IRS ruling on 12/27/17. In other words, if your property taxes are assessed on 1/1/2018 or later, you cannot pre-pay and deduct them in 2017.

Your state income taxes are deductible in the year they are paid. If you pay your 2017 state income taxes in April 2018, they are deductible in 2018. If you pay your 2017 state income taxes in 2017, they are deductible in 2017.


AMT does not affect most taxpayers. The overwhelming majority of taxpayers regular tax liability is greater than AMT, therefore making most taxpayers not subject to AMT.

 

[fairchaser]

Did you pay the remaining ‘17 taxes or ‘18?

I prepaid my 2018 taxes for city because they had been paid but my county taxes get paid in February, so I paid those early.

 

[fairchaser]

Property taxes must be paid AND assessed in 2017 to be deductible in 2017, per IRS ruling on 12/27/17. In other words, if your property taxes are assessed on 1/1/2018 or later, you cannot pre-pay and deduct them in 2017.

Your state income taxes are deductible in the year they are paid. If you pay your 2017 state income taxes in April 2018, they are deductible in 2018. If you pay your 2017 state income taxes in 2017, they are deductible in 2017.


AMT does not affect most taxpayers. The overwhelming majority of taxpayers regular tax liability is greater than AMT, therefore making most taxpayers not subject to AMT.

DB, does that mean people who prepaid before the ruling get to deduct and those after don’t? Leave it to the IRS to drop a turd in the punch bowl!

 

[Hawk]

Since Tennessee does not have a state income tax other than the Hall Tax and the way I understand the new law which allows up to 10,000 deductions for state and local taxes I would consult a CPA before rushing out to pay 2018 taxes in 2017.

 

[waynesworld]

Property taxes must be paid AND assessed in 2017 to be deductible in 2017, per IRS ruling on 12/27/17. In other words, if your property taxes are assessed on 1/1/2018 or later, you cannot pre-pay and deduct them in 2017.

Your state income taxes are deductible in the year they are paid. If you pay your 2017 state income taxes in April 2018, they are deductible in 2018. If you pay your 2017 state income taxes in 2017, they are deductible in 2017.


AMT does not affect most taxpayers. The overwhelming majority of taxpayers regular tax liability is greater than AMT, therefore making most taxpayers not subject to AMT.

DB, does that mean people who prepaid before the ruling get to deduct and those after don’t? Leave it to the IRS to drop a turd in the punch bowl!

:smash: Sorry but no a ruling is just the IRS's interpretation of the law as it is written. Pre-paying some expenses has not been allowed and would have to be set up as an asset not expense. I would not think that this bill would harm most people in TN as it taxes higher tax states.

 

[sgtwebb1]

Before pre paying, better call the tax assessors office to make sure the actual ASSESSMENT for 2018 has already been filed in their office.
If not, then they're saying it's not deductible for 2017.

 

[fairchaser]

Before pre paying, better call the tax assessors office to make sure the actual ASSESSMENT for 2018 has already been filed in their office.
If not, then they're saying it's not deductible for 2017.

I wonder how the IRS is going to figure out who’s on first with all the municipalities out there or are they just going to go by what they report? I’ve claimed extra property taxes paid for example in the year I bought a new house or refinanced because you paid it at closing. I’ve never had any kickback even though it didn’t match what was on the mortgage statement. I have another property with no mortgage and the only documentation I have is a canceled check and an invoice. To my knowledge nothing is reported to the IRS. I think as long as you have the documents to prove you paid and stay under the limits you should be ok. I bet we haven’t heard the last on this issue. I can tell you people up in the NE are standing in long lines in this bitter cold to prepay their taxes. Please don’t take this as tax advice btw.

 

[Jon54]

Did you pay the remaining ‘17 taxes or ‘18?

I prepaid my 2018 taxes for city because they had been paid but my county taxes get paid in February, so I paid those early.

As another post indicated, the IRS recently issued a ruling that 2018 taxes, which aren’t due, can’t be deducted. To be deducted, the taxes have to be assessed and due.

 

[fairchaser]

Did you pay the remaining ‘17 taxes or ‘18?

I prepaid my 2018 taxes for city because they had been paid but my county taxes get paid in February, so I paid those early.

As another post indicated, the IRS recently issued a ruling that 2018 taxes, which aren’t due, can’t be deducted. To be deducted, the taxes have to be assessed and due.

They would never be due this early but they could be assessed depending on the municipality. I may not get that deduction. But, it’s worth taking a chance. I look at lost interest for a year versus getting back 25%. No brainer.

 

[landman]

Did you pay the remaining ‘17 taxes or ‘18?

I prepaid my 2018 taxes for city because they had been paid but my county taxes get paid in February, so I paid those early.

The county taxes you just paid are for 2017, not actually your 2018 Property taxes, in TN property taxes are paid in the rear, the Bill comes out in November but you have until February to pay them. You didn’t prepay any property taxes

 

[fairchaser]

Did you pay the remaining ‘17 taxes or ‘18?

I prepaid my 2018 taxes for city because they had been paid but my county taxes get paid in February, so I paid those early.

The county taxes you just paid are for 2017, not actually your 2018 Property taxes, in TN property taxes are paid in the rear, the Bill comes out in November but you have until February to pay them. You didn’t prepay any property taxes

That’s correct for county taxes but my city taxes are paid before year end by my mortgage company. So the taxes I paid were for 2018 or so I was told by the clerk who took my money.

 

[RandyinTN]

If you have a "gray area" as far as deductions the rule is to go ahead and deduct it. You might, or might not get audited. And even if you do, they could allow it anyhow. On the other hand if you don't deduct it you are guaranteed to lose out.