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For those rushing to pre-pay 2018 property taxes in order to maintain full deductability of those sums, it might be time to examine new IRS guidance on the subject. At Bloomberg, John Voskuhl explains:
U.S. taxpayers can deduct their 2018 state and local property taxes on their 2017 returns if they pay those tax bills before the end of the year — and only if the taxes were assessed before 2018, according to the Internal Revenue Service.
The federal authority’s guidance reflects an effort to address some of the confusion triggered by the tax overhaul signed by President Donald Trump last week and the scramble in the high-tax states to avoid some of its provisions.
Homeowners in states with the highest property taxes have been peppering local officials with questions about how to prepay the levies to try to take advantage of a tax break that will be limited next year. They’re being encouraged by state officials, notably in New York and New Jersey, who are trying to facilitate such prepayments.
In the Washington D.C. suburbs, WTOP found a line of hundreds snaked through a local government building in Fairfax, Virginia, looking to prepay their 2018 bills. Fairfax County officials, strained by the crowds, are telling people to wire the money instead. In nearby Arlington County, Chief Deputy Treasurer Kim Rucker told local television station Fox 5 that the increased pace of residents looking to cover 2018 tax bills has prompted hundreds of calls during the normally quiet Christmas period, and dozens of prepayments a day.
The tax law, which Trump signed Dec. 22, has prompted some local governments to revise their rules in a bid to facilitate the last-minute change in federal tax strategies. The Montgomery County Council in Maryland broke its winter recess to pass a bill allowing residents to prepay 2018 taxes, the Washington Post reported. However, the county doesn’t appear to have completed its 2018 assessments — meaning its residents wouldn’t qualify under the new IRS guidance, the newspaper reported.
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