With tax reform signed into law, homeowners in areas with high property taxes are scrambling to prepay their 2018 tax bill in order to take advantage of deductions that will curtailed once the legislation takes effect Jan. 1. The new tax law, which Congress passed and President Donald Trump signed, caps the amount of state, local, and property taxes that homeowners can deduct at $10,000.
However, there’s no guarantee homeowners who prepay their 2018 property taxes will be able to deduct the payment. On Wednesday, the IRS posted an advisory notice that said prepaying property taxes will work only under limited circumstances. To qualify for the deduction, property taxes will need to be paid in 2017—but they also must be assessed in 2017, The New York Times reports.
Source: “Homeowners Scramble to Pre-Pay Property Taxes,” CNNMoney (Dec. 27, 2017) and “Prepaying Your Property Tax? IRS Cautions It Might Not Pay Off,” The New York Times (Dec. 27, 2017)