Donald Trump

IRS Cautions Taxpayers Prepaying Property Taxes

The IRS says taxes can be prepaid and deducted from federal returns if local authorities levy the taxes in 2017 and they are paid by Dec. 31

The U.S. Internal Revenue Service issued a notice Wednesday warning homeowners who are rushing to prepay their 2018 property taxes that their payment may not be tax deductible, NBC News reported. 

A law signed by President Donald Trump, which goes into effect next year, will impose a $10,000 combined limit on the deduction of state and local income property taxes. While there is no limit on that deduction for 2017, a full deduction for the prepayment of state or local property taxes depends on whether the taxpayer makes the payment this year and whether the property taxes are assessed prior to 2018.

"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the IRS notice said.

"State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed," it said.

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