Consider Pre-Paying 2017 Real Estate Taxes to Receive Full Deduction Benefits Prior to Federal Tax Law Changes
We recommend individual taxpayers consider pre-paying their personal 2017 real estate taxes prior to December 31, 2017 in order to maximize potential federal tax deduction benefits. Taxpayers that pay their real estate taxes through escrow accounts are cautioned to contact their lender first to avoid a double payment.
Both current versions of the House and Senate tax reform bills (not reconciled as of this writing) propose to limit the real estate tax deduction on personal tax returns to a maximum of $10,000 per year. Because Illinois taxpayers pay property taxes in arrears, they should consider prepaying their 2017 real estate taxes that are deductible on their individual returns prior to December 31, 2017. However, because there are so many moving parts to both versions of the bills and because the individual impacts may vary with each taxpayer, you should consult with your income tax advisor before concluding to pre-pay.
Pre-paying your 2017 taxes (first installment for Cook County taxpayers) could allow you to fully maximize your real estate tax deduction before it may be limited or eliminated entirely. If your 2017 real estate tax obligation is less than $10,000, we anticipate you could continue to prepay in later years and carry your benefit forward.
Cook County taxpayers can prepay the first installment of their 2017 taxes (due in 2018) as explained at cookcountytreasurer.com/prepayment.aspx. The Treasurer specifies four different ways you can prepay. In Cook County, the first installment is an estimated bill equal to 55 percent of the prior year’s tax bill. Other counties allow prepayment up to 100 percent of the previous year’s tax bill.
If you have any questions about your property taxes or you think your property taxes are too high, contact the Law Offices of Gary H. Smith, P.C. today and we’ll help you navigate through the complicated property tax process. More than 80 percent of our clients are awarded reductions in their taxes. Call us for assistance at 312-236-7447.