Are Prepaid Property Taxes Deductible?

The Pro’s and Con’s are all over the place!  April 17, 2018, was the tax deadline, and tax advisers still could not agree on whether prepaid 2018 property taxes can be deducted in full. Congress passed a tax reform bill late last year, capping write-offs for state and local taxes at $10,000 per return for single filers and married couples. 

The move set off a rush of homeowners at the end of last year to prepay their property taxes for 2018 ahead of the tax bill taking effect this year. 

The overhaul “barred deductions for many prepayments of 2018 state and local income taxes, but it was silent on deductions of prepaid property taxes,” The Wall Street Journal reports. 

On Dec. 27, the IRS had warned prepaying owners that not all prepayments of 2018 property taxes would be deductible on 2017 returns. To be eligible for a write-off, the owners must have known their tax liability at the time of payment, the IRS stated. 

Some tax specialists disagreed with the IRS’ assessment that you can only deduct the portion that was known or determined at the time. Others argued you could still make the prepaid deductions as long as they were based on reasonable estimates. They assert that prior tax rulings and regulations support this argument too. 

“If the amount is a reasonable estimate made in good faith, it’s deductible,” asserts Stephen Baxley, who heads tax planning for Bessemer Trust, a multifamily office.

Some tax officials say they’re closely following the IRS’ guidance. “Some CPA firms believe, the amount due must be determined for a prepayment to be deductible,” You may find many large CPA firms are on this page. 

Some accountants say they’re doing both.  Many CPA’s, not accountants, recommend clients deduct prepayments of known amounts. But possibly will allow a deduction of an estimate “The opinion of some CPA specialist? “If their client understands the risk that the IRS will disagree.”

Warning, you must seek the advice of your tax preperation firm.  I am not a CPA or accountant and do not have a strong opinion either way. 

Author: danswingblog

Welcome to my Blog site. I don't provide this information to boast, I humbly provide this, so you are informed of my qualities and experience. Since the first of 2017 Dans averaged close to $1,000,000 in sales monthly. Dans accomplishments lend wisdom and credibility that I'm proud of. An informed understanding of who you elect to represent you is as important as the investment you hold in your hands. Dan has celebrated over 17 years as a full time Realtor. Successfully listed and sold homes well through the 7 figure market. Advises and assists clients with challenging Portfolios! Not uncommon to be working with foreign nationals, buyers that leverage the Sterling, Euro, and similar currency. Dan welcomes the Global community, with friends in many Nations. He brings a reputation of Integrity, Expertise, and Focus. Our customers deserve the best. Currently a "FULL TIME" Realtor listing and selling homes in Tampa Bay Golf and Country Club and provides B.P.O.'s, Broker Price Opinions, B.O.V's, Broker Opinion of Value to many lenders. Manage and Sells R.E.O., Real Estate Owned properties, distressed properties! Evaluate and negotiate solutions for sellers and lenders. Developed, operated and sold a Florida "AWARD WINNING" Ad Agency! 2010 & 11 Commercial Agent of the year. RE/MAX Paramount Properties. Relocated to RE/MAX Marketing Specialist in January 2012. Successfully closed on many extremely challenging foreclosures, and Short Sale. Coached and participated in Commercial and Multi-Income Family REO's in the past six years. Received license in 2000, took the class to sell his own properties, coerced by instructor to pursue an active license. Assist residential and commercial brokers, investors and individuals with real estate needs. Elected to the Auburndale City Commission in 1986-88. Created and served as 1st Redevelopment Chair in 1988 & 89 personally put in place all the elements for the Auburndale CRA. 1990 City Commission refused to give a full vote of confidence. After a 5 year journey to personally raise funding, extensive research and study for the CRA district perimeters, and stunned with the Commissions doubt. Positioned himself to run for office again, was re-elected to Auburndale Commission, to serve 1991-93 to full fill the CRA master plan! Active with the Central Florida Development Council from conception in 1985 and sat on the board periodically for the past 25 years representing municipalities and private investors. The positions Dan held from 1986 through 1993 enabled him to have a complete workable understanding of the State of Florida Comprehensive Plan for Future Land Use, and the benefits of intergovernmental agreements, utility franchise expansions, and public/private partnerships! Specialties: Assets recovery & receivership, Real Estate Portfolio's, REO & Short Sale of Residential and Commercial negotiations, marketing consultant, public relations, and Broker Price Opinions for residential and commercial lenders.

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