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Pre-paying Property Taxes before the New Year? (1 Viewer)

S

SteelCurtain

Footballguy
Who here is going to pre-pay their 2018 property taxes before January 1?

http://abcnews.go.com/Business/york-residents-rush-file-property-taxes-rules-effect/story?id=52006402

It sounds like whether one can claim the deduction in 2017 is in question. 

That being said, New York Governor issued an executive order on this -- https://www.governor.ny.gov/news/governor-cuomo-takes-emergency-executive-action-deliver-property-tax-deductibility-new-yorkers

I welcome accounting or other opinions on this topic but really don't want to spiral into a political conversation.

 
Really just depends on where you live, if you itemize, and how much in taxes you deduct when you itemize.

The reasoning for paying it early is because the cap is 10k for 2018...you get no benefit on your federal return for taxes you pay above the 10k as itemized deductions. However, you DO benefit still in 2017 if you go over the 10k.

Long story short, it really just depends on your situation.

 
lol...my wife is pissed at the extra work this has put on her as she tries to close out the company's books for the year. She handles some personal accounting for her boss and family.

 
I always prepay and most people I know do.  Even more reason to do so now with the limited deduction going forward.

 
My taxes are paid through my mortgage company so I don't think I have a choice which is actually nice so I don't have to figure out whether its even worth doing it.

 
NutterButter said:
that includes state and local?   10k is the cap on everything.
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Ok maybe I'm an idiot but what does state and local have to do with my federal taxes?

Don't think I ever claimed state taxes on my federal return :unsure:

 
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belljr said:
Ok maybe I'm an idiot but what does state and local have to do with my federal taxes?
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State and local tax payments are deductible on the following year's federal taxes.

On the subject of the thread- I did this, and others should too assuming they have itemized in the past and have the means.  You'd be crazy not to do it. But check and make sure your state/city allows it and will process it prior to the new year.  In DC the mayor announced it.

 
Walking Boot said:
My state income tax plus local property tax comes to just under 10k.

My mortgage interest was about 11.5k last year. 

Add in charitable donations and my total deductions came to about 22.5k.

The new standard deduction for single filers is 12k. So looks like I'll still itemize. 

Although since property tax is paid by my mortgage company out of escrow, I don't have a choice to make. 
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You could always get married.

 
I itemize so I must be claiming it, I just don't realize it. I think the standard deduction is usually higher for me anyway

I don't have local tax.   

 
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Walking Boot said:
My state income tax plus local property tax comes to just under 10k.

My mortgage interest was about 11.5k last year. 

Add in charitable donations and my total deductions came to about 22.5k.

The new standard deduction for single filers is 12k. So looks like I'll still itemize. 

Although since property tax is paid by my mortgage company out of escrow, I don't have a choice to make. 
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I don’t pay property taxes through my lender, but my understanding from reading a couple articles this morning is that you might be able to still prepay. It’s just more complicated - you may have to pay again through your lender, and then seek a refund/reimbursement of the excess, or something like that. That said, getting refunds from some jurisdictions (like DC) is a total nightmare and may not be worth the hassle. 

 
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what exactly are people doing here. I dont even know what my 2018 property taxes will be yet. 

 
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culdeus said:
what exactly are people doing here. I dont even know what my 2018 property taxes will be yet. 
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prepay 1st installment of 2017 property taxes in calendar year 2017 rather than early 2018. this way you can deduct them with 2017 taxes rather than with 2018 taxes when the standard deduction will double and the deduction will be capped at $10k. for me, it only means paying them a month or two early.

 
Walking Boot said:
My state income tax plus local property tax comes to just under 10k.

My mortgage interest was about 11.5k last year. 

Add in charitable donations and my total deductions came to about 22.5k.

The new standard deduction for single filers is 12k. So looks like I'll still itemize. 

Although since property tax is paid by my mortgage company out of escrow, I don't have a choice to make. 
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Mine is as well, but your statement is not true.  I have prepaid and my lender informed me that if I provide proof of payment it will adjust my mortgage payments over the rest of  2018 to cover the fact that it will not have to cover these expenses.

 
Aaron Rudnicki said:
prepay 1st installment of 2017 property taxes in calendar year 2017 rather than early 2018. this way you can deduct them with 2017 taxes rather than with 2018 taxes when the standard deduction will double and the deduction will be capped at $10k. for me, it only means paying them a month or two early.
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Ok.  Well as far as I can tell this doesnt work in Texas. They won't report the pre pay as a pre pay in a way to get it inside 2017 

 
culdeus said:
what exactly are people doing here. I dont even know what my 2018 property taxes will be yet. 
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In Wisconsin property tax bills are mailed out in early Dec.  Usually get them around the 10th.  50% is due on Jan 31 and the remainder is due July 31.  However if you pay them on or before Dec 31 you get the write off before they are technically due.  I know a lot of people who would alternate doubling up property taxes one year to itemize then having no taxes and take the standard deduction the following year. That $10,000 cap eliminates that strategy.

 
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thecatch said:
I don’t pay property taxes through my lender, but my understanding from reading a couple articles this morning is that you might be able to still prepay. It’s just more complicated - you may have to pay again through your lender, and then seek a refund/reimbursement of the excess, or something like that. That said, getting refunds from some jurisdictions (like DC) is a total nightmare and may not be worth the hassle. 
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Damn it.  Now I need to consider this.  I read something else that said if you got hit with the amt in 2016, prepaying won't help b/c the amt doesn't take the prepaid prop taxes into account.  It will lower your regular federal taxes, but since you're already paying the amt, it won't matter.

 
NutterButter said:
Damn it.  Now I need to consider this.  I read something else that said if you got hit with the amt in 2016, prepaying won't help b/c the amt doesn't take the prepaid prop taxes into account.  It will lower your regular federal taxes, but since you're already paying the amt, it won't matter.
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I’m so pissed they kept the personal AMT provision in

 
eoMMan said:
Really just depends on where you live, if you itemize, and how much in taxes you deduct when you itemize.

The reasoning for paying it early is because the cap is 10k for 2018...you get no benefit on your federal return for taxes you pay above the 10k as itemized deductions. However, you DO benefit still in 2017 if you go over the 10k.

Long story short, it really just depends on your situation.
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Ok. So if my property taxes are $1,600 (0.45%), my state income tax around $5,000. Is there any reason to prepay?

 
belljr said:
I itemize so I must be claiming it, I just don't realize it. I think the standard deduction is usually higher for me anyway

I don't have local tax.   
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Your state / city / school district do not have property taxes?

Or you do not have property?

 
Our mortgage company pre-pays every year in November to take advantage of a discount for early payment. I would have to prepay 2019 taxes to get any benefit...

 
This is a huge mess. Lines at the tax receiver office here in NY are out the door today. No clear information, county website is a mess and the number are all unclear. That said I’m going to send a bunch of checks out before December 31 and hope for the best. All I can really do in light of Trump’s redistribution of wealth from blue states to red states err I mean “new income tax legislation.”

 
Pipes said:
It depends what his mortgage interest and other itemized deductions look like.  He still may want to prepay.
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Correct.  If he's not going to itemize next year b/c the standard deduction is doubled, then he can still benefit from prepaying.

 
-OZ- said:
Oops, forgot school millages. So my property tax bill is just under $4,000. Assume the same answer as I won't be over $10k next year?
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Without knowing your mort int, donations and other itemized deductions it seem like you most definitely should prepay. Since it doesn’t seem like you will itemized in 2018 it’s a lost deduction if you wait.  

If you don’t have enough to itemize in 2017 then my point is moot.

 
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My annual property tax bill is around 11,000 each year. This seems like a lot of work for not much in return. 

Is the potential impact equal (tax bill) less 10,000 times (your tax rate)? 

 
Basically if you itemized in 2016 you'll likely itemize in 2017.  In most circumstances you'll want to prepay your property taxes because...

1.  Tax rates are going down in 2018 so a deduction in 2017 is worth more than a deduction in 2018

2.  There is a good change you won't itemize in 2018 so it will be a lost deduction.  With that 10,000 tax cap, if you are married, you'll need $14,000 of mortgage interest and charitable   contributions just to hit the standard deduction.  I'm guessing well over 50% of the people that currently itemize won't for 2018

Now it's not an automatic to prepay because if you're getting hit with AMT you're losing that state deduction anyway but in most cases it makes sense to do it.

 
Brony said:
My annual property tax bill is around 11,000 each year. This seems like a lot of work for not much in return. 

Is the potential impact equal (tax bill) less 10,000 times (your tax rate)? 
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I think that your formula would need to account for whether you would switch to the standard deduction or not.  If you won't have itemized deductions totaling a greater amount than the standard deduction, then you basically lose all of the property tax deduction.

If you would switch to standard deduction for 2018, then the impact is total tax bill times tax rate.

 
Brony said:
My annual property tax bill is around 11,000 each year. This seems like a lot of work for not much in return. 

Is the potential impact equal (tax bill) less 10,000 times (your tax rate)? 
Click to expand...
no state tax?  under the final bill, its prop + state tax up to 10k.

 
cosjobs said:
But in Texas, as I understand it, they aren't cashing early payments until after the first.
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I got some clarification  on this. Evidently they are letting us prepay in Travis County. I paid today in person, took about 15 minutes. Could have mailed or dropped off, but I wanted a stamped receipt.

 
Otis said:
This is a huge mess. Lines at the tax receiver office here in NY are out the door today. No clear information, county website is a mess and the number are all unclear. That said I’m going to send a bunch of checks out before December 31 and hope for the best. All I can really do in light of Trump’s redistribution of wealth from blue states to red states err I mean “new income tax legislation.”
Click to expand...
Thanks Obama

 
cosjobs said:
I got some clarification  on this. Evidently they are letting us prepay in Travis County. I paid today in person, took about 15 minutes. Could have mailed or dropped off, but I wanted a stamped receipt.
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What are you pre-paying?  The taxes that are due in January, but now you just pay in December?  I don't really call that pre-paying like what people in New York are doing.

I am getting word from accounting people that if you try to stack two years worth of property taxes in one year, it likely won't fly and they will kick it out on audit.  

 
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