Thanks to a provision in the recently enacted GOP tax bill sharply restricting the deductibility of state and local taxes (SALT), homeowners in high-tax states are rushing to prepay their 2018 property taxes before December 31, so that they can be fully deducted on 2017 tax returns.
The new federal tax rules limit the deduction of state and local taxes to $10,000 per year beginning in 2018.
By contrast, Agawam, Mass.is mailing property tax bills a few days early this year so people can know the amount if they want to prepay. However, the law almost doubles the standard deduction, which may mean that fewer taxpayers will itemize.About 35 percent said they would likely increase medical expenses and the state and local income and sales taxes.
A note for property owners: The San Luis Obispo County Tax Collector says his office can not accept advance payments for 2018-19 property taxes.
Thus, residents across New Jersey and other states have been flooding their local tax offices this week in an attempt to prepay their 2018 taxes to stave off the impact.
Chris Christie has signed an executive order requiring towns to accept property tax prepayments for 2018. The tax collector's office is fielding thousands of calls from residents. On Wednesday, homeowners were lining up in droves at tax collection offices there, hoping for one last chance to take advantage of a major tax deduction before it is wiped out in the new year. Online payments are due by Sunday, Dec. 31, at 11:59 p.m.
Prepayment would only benefit those who itemize their deductions, and anyone looking to prepay should consult a tax professional first. Some municipalities allow online payments.
Lower Merion Township posted a message to residents on its website stating that, in response to "numerous inquiries from residents", the township's lawyers reviewed the matter and agreed with the county's position on state law. "For more information, or to arrange for early payments, contact your local municipal tax collector".
"I'm sending my checks in today", says Vanessa Merton of Hastings-On-Hudson, N.Y. She estimates the law change will cost her between $6,000 and $9,000.
New Jersey is home to the nation's highest property taxes, and there is now no limit in how much homeowners can claim in property taxes on their federal income tax returns.
"This is probably the only piece you can do", he said, noting the Olmsted County office has seen a steady stream of people since last week. By Saturday, Fifer said, the city had received more than $1.6 million in prepayments.