2018 Property Taxes - New Tax Legislation

The Internal Revenue Service (IRS) announced Wednesday that homeowners can deduct their prepaid 2018 state and local property taxes on their 2017 returns if the taxes are assessed and paid this year, postponing possible hikes from the tax-reform legislation signed into law this month.

The announcement came after swarms of homeowners lined up at tax offices around the country attempting to prepay their 2018 taxes before the end of the year, allowing them to avoid a new $10,000 cap on the amount of state and local taxes that can be deducted from income before determining federal tax liability.

President Trump signed the tax reform bill into law last week, culminating a major legislative victory for congressional Republicans. The bill stated that income taxes could not be paid early, but remained vague on whether the same ban applied to property taxes.

On Wednesday, the IRS issued a statement saying homeowners could prepay 2018 property taxes only if state laws allowed them to be assessed before the year's end.

*Please contact me directly if you have any questions on how this new tax legislation applies to you.

DavidJohnstonRE@gmail.com or 858-774-8063