Here’s what you need to know about prepaying your property taxes before 2018
Tax season is on the horizon and big changes are ahead – the new tax bill will go into effect on January 1, 2018. Depending on your individual situation, there may be a few things you can do now to prepare for those changes, including maximizing your 2017 tax deductions.
Under current tax law, homeowners can deduct taxes paid to state and local governments, including property, income, and sales tax.
The new law caps the deduction at $10,000, either for property taxes in addition to state and local income taxes, or sales tax.
By prepaying property taxes that would otherwise be due in 2018, some taxpayers may be able to claim a deduction on their 2017 individual income tax return that would otherwise be lost in 2018 under the new legislation.
If you and your tax advisor decide to prepay your taxes, here is a list of prepayment options.
In Illinois
- Cook County residents may prepay the 2017 1st installment tax bill (55% of the total 2016 bill) at cookcounytreasurer.com.
- DuPage County residents may prepay up to 105% of their 2016 real estate tax bill at dupageco.org.
- Lake County residents may prepay up to 100% of their 2016 bill. Any balance will be billed in 2017. More information is available at lakecountyil.gov.
- McHenry County residents may prepay a deposit of any amount toward their 2017 bill at co.mchenry.il.us. The deposit amount will be held until 2017 tax bills are issued. Any difference must be settled by the due date of the 1st Installment.
- Will County residents may prepay a minimum of 50% and a maximum of 110% of the 2016 bill at willcountytreasurer.com.
Additional details can be found in this local news story or this local news article.
Taxpayers who fall under the Alternative Minimum Tax (AMT) will not receive a benefit from pre-paying. So before making any payments or claiming deductions, it’s always important that you check with your personal tax advisor for advice specific to your property or portfolio.
What if you own 5 properties in Cook county…is the deduction 10000 for each property?
Hi Mary. I’m @properties’ communications director. Thanks for stopping by! I believe the deduction has to do with itemizing for your primary residence. Investment properties can deduct their costs, including taxes, against income. Because every situation is unique, we suggest consulting your accountant/tax advisor for specifics. Happy holidays!
What if your taxes are escrowed?
Hi Elizabeth, if your taxes are escrowed you can still pre-pay per your county, but then you’ll want to notify your lender so that they are aware and adjust your escrow account accordingly.
But are those pre payments deductible on our 2018 returns? The IRS stayed specifically that estimates 105% of 2016, are forbidden. Does that exclude estimates of 2017 taxes because we pay in arrears?
I meant 2017 returns filed in 2018
Hi John. @properties’ communications director here. We would suggest checking on that with your accountant because every person and situation is different – some people can’t deduct their taxes at all and prepaying 2017 property taxes depends on the county.
We did find this article though that might shed more light: http://www.chicagobusiness.com/article/20171228/NEWS02/171229923#utm_medium=email&utm_source=ccb-morning10&utm_campaign=ccb-morning10-20171229
Thanks for reading!