Today is the last day to make prepayments on real estate taxes before the end of the year at county treasurers’ offices, as owners rush to beat new rules that could change the way people benefit from tax deductions.
“People are lined up out the door and across the lobby. It started at 8:30 Tuesday morning,” Warren County Treasurer Barney Wright said Thursday. “We’ve been here late all week taking care of processing payments … A lot of people are concerned about paying their taxes early. People are worried about losing their deductions.”
Siva Iyer of Mason said he had been waiting about 30 minutes in the hall outside the office. He said he expected to save “at least a thousand dollars” on his federal tax bill by paying his property taxes before the end of the year.
Under President Donald Trump’s tax plan, which goes into effect next year, state and municipal tax deductions will be capped at $10,000. People may benefit by prepaying their real estate taxes this year and include that as deductions for tax filings due in April 2018.
The IRS issued an advisory Wednesday, stating the agency has received a number of questions as to whether prepaid real estate taxes are deductible.
“In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018,” the IRS advisory states. “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.”
In Ohio, property taxes are paid for the year prior, so payments due in 2018 are based on 2017 values.
Greene County Treasurer Dick Gould, who works privately as a certified public accountant, said he is advising his business clients that prepaid property taxes will be able to be included in their 2017 itemized deductions, but it’s likely only to benefit you if you fall under the alternative minimum tax (AMT).
“Prepayments are a tax planning tool that people have been using for years to accelerate their deductions,” Gould said. “I expect the IRS will be focused on states that have a different tax structure than Ohio.”
The lines were not as long in Montgomery County, but computer engineer Peter Soski was among those waiting to prepay taxes for his home near Miamisburg. He said this was the first time to prepay his real estate taxes.
“Through talking with friends and getting more information about the prepay, at the end of the day hopefully try to recover some money,” Soski said. “I happen to be fortunate enough to have some liquid cash in which I can make this step … so I don’t see any downside … If nothing else, I’ll pay a bill that we all know is coming because that’s one thing in life that does not change.”