Prepaying 2017 Property Tax
Posted on December 29th, 2017 in Uncategorized

What you need to know about prepaying property taxes in 2017

As the year comes to an end there is a lot of confusion about the coins-1523383_1920effects of the recently passed tax legislation on the deductibility of property tax payments.  With little time left before the ball drops on 2017 here is a brief synopsis on the new rules for deducting state property taxes.

First, many people are rushing to pay their property taxes ahead of time in an attempt to take the property tax deduction in 2017 before the new tax law takes effect. In response to the confusion the IRS released an advisory memo, IR-2017-210, on December 27th informing tax payers that it is permissible to “prepay” property tax so long as the tax has officially been “assessed” by the county.  So, if you are one of those people trying to make a last minute property tax payment please be careful to only pay the amount assessed.

Second, for those high earners who face alternative minimum tax (AMT) issues be aware that state income and property are among the claw back items. This year AMT is triggered for couples making over $187,800 and individuals making over $93,900.  If you are one of these high earners, prepaying property taxes in the attempt to seek a tax deduction in 2017 may have no effect on your 2017 tax return at all.

Third, state income and property taxe deductions are capped at $10K per year starting in 2018. Texas does not have an income tax so the only tax to consider would be local property tax.  According to the median home value in Harris County is $131,000 and the average property tax bill is around $3,040 resulting in a property tax rate of 2.3%.  In order to breach the $10,000 tax cap, a tax payer would have to own a home with a value in access of $440,000.  Based on the numbers above most Houston homes will not be affected by the property tax cap and prepaying property taxes will have little effect.

At the end of the day prepaying property taxes in 2017 might be the right decision for some but for the majority prepaying property taxes will not have the affect envisioned.   If you have questions about the new tax legislation and it potential effects please feel free to contact Zagotti & Burdette CPA, LLC.

About the Author – Phillip Zagotti, CPA is a partner at Zagotti and Burdette CPA, LLC. He can be reached at or (832) 800-3347. 

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