Tax Alert - Is this the time to accelerate your property tax payment into 2017?
On Friday, December 15, the House and Senate conference committee reached a tentative agreement on tax reform. It is anticipated that the legislation will be voted upon by the full chambers later this week.
One of several issues that has received significant discussion over the past few days is whether it makes sense for taxpayers to prepay real estate taxes that would otherwise be due in 2018. Pursuant to the terms of the conference agreement, individual taxpayers would only be allowed to deduct state and local income taxes and real estate taxes up to $10,000. No deduction would be allowed for the payment of taxes in excess of this amount. By prepaying property taxes that would otherwise be due in 2018, taxpayers may be able to claim a deduction on their 2017 individual income tax return that would otherwise be lost in 2018 under the proposed legislation.
Several Illinois counties allow for the prepayment of real estate taxes. For example, Cook County allows for the prepayment of up to 55% of the tax bill paid in 2017 (https://www.cookcountytreasurer.com/prepayment.aspx). Each county has its own rules and taxpayers should review those rules prior to attempting to prepay any real estate taxes.
Also, individuals who are paying alternative minimum tax will likely lose some or all of the benefits associated with prepaying real estate taxes. You should consult with your income tax advisor to determine if prepayment of real estate tax will be beneficial given your individual circumstances.
We will provide additional updates as we continue to learn more about the legislation. For more information, please contact your Burke, Warren attorney. This memo was prepared by Greg Winters. Greg can be reached at (312) 840-7059 or email@example.com.