Should I prepay 2018 property taxes now?

11 Replies

There's a lot of buzz out there on this. I know most comments won't be front CPAs or tax professionals. I might be a little late on this, but should I pay my 2018 property taxes now before the year runs out? 

If it is for rental properties, the deductibility hasn't changed so no need to prepay. If it is your primary residence, then first evaluate whether your state income tax (or sales tax) plus property taxes will exceed $10,000, if no, then no need. Finally, the IRS guidance issued this week states that unless the property taxes have been assessed, they aren't deductible in that tax year. I don't know about the assessment process in Washington state so I am afraid I can't give you state specific information.

@Gulliver R.

You're not going to be able to do it in our state.

State law does not allow county treasurers to accept tax payments until the tax rolls have been completed, and that won't be until mid-January.

Source:

https://www.bizjournals.com/seattle/news/2017/12/27/king-county-assessor-property-tax-prepay-deduction.html

@Gulliver R.  I strongly disagree with @Victor N. .

Yes, you can wait and deduct in 2018, too, but the reason to prepay is not because you won't be able to deduct it next year. It is to grab your tax deduction in the current year, one year sooner. 

Even more important this year, because the rates are going down, so you should generally get more mileage out of your deduction this year.

Of course notice my "generally" safety valve. There're plenty of possible scenarios where paying next year could be better, but it would require a case-by-case analysis.

@Gulliver R. - now, the state law prohibition pointed out by @Nghi Le is an entirely different conversation. I'm no expert in your state law, but obviously you can't pay something that the state is not allowed to accept.

@Gulliver R.  

Im not that smart but got an email from on accounting firm ( i make no representation on this but sharing as a point of view and leaving out the name  )

The IRS announced on 12/27/17 that prepaid 2018 property taxes will not be deductible in 2017 if they have not been assessed. https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017The IRS announcement was in response to recent reports advising individuals to make a prepayment of 2018 property taxes on the national evening news, 12/27/17 cover of the wall street journal as well as the governor of New York bringing in additional employees to accept prepayments. We are in a rapidly changing tax environment. It is difficult to stay ahead of the tax laws when they continue to change on 12/27/17. We will continue to review the new tax law and keep you informed of any potential planning opportunities.  
@Michael Plaks actually we agree. I assumed (perhaps incorrectly) that the OP was asking about whether he should prepay in light of the new limitations on the deductibility of some property taxes for 2018. Of course, you are correct about the general strategy of accelerating deductions especially into higher tax bracket years.
Originally posted by @Gulliver R. :

Got it. I’ll stay put for now not prepaying and keep my ear to the ground. Thanks everyone!

 Try to read today's blog post on my website. BP will not let me link it here, unfortunately.