Important Tax Information: Pre-Payment of Property Taxes
We hope you have had a wonderful holiday season. As you may have read, last week Congress passed a fairly sweeping piece of tax legislation that will result in significant changes to the tax code in 2018. The tax code is changing both for corporate taxes and for individual taxes. The good news is that most families (and corporations) will be receiving a tax cut in the New Year, despite many changes to current exemptions.
The IRS released their judgment on the pre-payment of property taxes last night. This was an important development and one that we wanted to bring to your attention immediately.
In short, it may be worth pre-paying your upcoming property taxes, which will be due in 2018, now in 2017. Importantly, these are property taxes levied in 2017, that will be due next year.
Because the new tax law will limit your combined property tax and state income tax deduction to $10,000 in 2018, by pre-paying the property taxes now you can maximize the taxable deduction for your 2017 tax return (and avoid losing a portion of the deduction next year with the limit capped at $10,000). This is a time sensitive matter and you will need to pay these property taxes to your local municipal government by December 29th.
Please feel free to call us directly to discuss. In addition, it may be a good time to consult with your CPA on a call this week to review this matter with them. Wishing you and your family a wonderful New Year’s holiday.
Mark R. Brown, CFP®