This alert was posted prior to the passing of more recent tax legislation. Before acting on any of the information in the following piece, please consult with a tax expert to learn if and how current legislation might impact or nullify what is stated in this article.
There is one area of the Tax Cuts and Jobs Act that affects most of our clients in 2017. The Act limits the deduction for state and local income, sales, and real estate taxes paid to a total of $10,000 per year in 2018 and beyond. Therefore, it may be beneficial to prepay certain real estate taxes on your personal residences in 2017.
The new law specifically notes that prepayment of 2018 state income taxes cannot be used as an itemized deduction on a 2017 income tax return.
It seems that real estate taxes that have already been assessed can be deducted in 2017 if paid in 2017. This may or may not benefit you in 2017 depending upon your Alternative Minimum Tax (AMT) situation. However, you will most likely not receive any benefit from paying your real estate tax in 2018 since the deduction will be limited, as discussed above.