On Wednesday, December 27th, the IRS issued an advisory regarding the prepayment of 2018 property taxes before the end of the year. Due to the significant reduction to a $10,000 deduction cap for state and local income taxes and property taxes under the new tax law beginning in 2018, individual taxpayers were considering paying 2018 property taxes before the end of the year.
Congress had issued guidance that prepayment of 2018 state income taxes would not be deductible but the prepayment of property taxes was not addressed. The IRS issued its own guidance on Wednesday advising tax professionals and taxpayers that prepayment is only deductible if the property taxes are assessed prior to 2018. Prepayments of anticipated property taxes will not be deductible.
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