The IRS published guidance in early January that potentially limits some taxpayers’ ability to prepay their real property taxes in 2017 for future years. The Tax Cuts and Jobs Act (TCJA) limits the combined deduction for local, state, and property taxes to $10,000. The law prevents taxpayers from prepaying their 2018 state and local taxes but provides no such limitation for real property taxes. This absence of such prohibition was the starting pistol for a taxpayer race to prepay their property taxes in 2017. In Cook County, Illinois, as an example, nearly 50,000 taxpayers prepaid over $300 million in real property tax. A year ago, 1,700 taxpayers prepaid $13 million. The IRS advisory may prevent some taxpayers from prepaying depending on when the tax was assessed and paid.
See Ivan H. Golden, IRS May Limit Ability to Deduct Property Tax Prepayments, Wealth Management.com, January 2, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
