The Internal Revenue Service (IRS) issued a new advisory on Wednesday regarding pre-payment of 2018 property tax, which says that pre-paying anticipated property taxes that haven’t been assessed in 2017 will not be deductible in 2017.
The advisory is a response to a barrage of queries that the new tax code appears to have caused. Peopled flooded the IRS’s help lines with questions about whether or not pre-paying their 2018 property taxes would make them eligible for deductions in 2017.
The IRS has given two examples to clarify the situation.
In the first example, if the county assesses the property through the middle of 2018 and the second installment of that payment falls in 2018, then taxpayers may pay that second installment by December 31, 2017, and claim a deduction for that pre-payment in the 2017 tax return.
In the second, which clarifies the issue further, when the assessment is due in July 2018 for the 2018-2019 period, pre-paying property tax in 2017 will not make them eligible for a deduction in their 2017 tax return.
In summary, it may not be advisable to pay your property taxes early. Check with your tax advisor to see if an early payment will actually allow you to claim a deduction in 2017. Otherwise, you’re just out the money with no additional benefit.
To see the full advisory, please visit the IRS website here.
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