Is it advantageous to pre-pay the CA property tax due Feb 1st 2018 (which covers part of 2017 and 2018) before the end of the year to get the write off in 2017 -assuming your combined state income tax and property tax is over the 10,000 limit for 2018??
Part of the savings would be offset by the AMT I think
Or are they not going to allow this gaming of the system??
This is what the new text bill Page 604 Conference Agreement on the subject is saying, you can try it on your own risk:
The conference agreement also provides that, in the case of an amount paid in a taxable
year beginning before January 1, 2018, with respect to a State or local income tax imposed for a
taxable year beginning after December 31, 2017, the payment shall be treated as paid on the last
day of the taxable year for which such tax is so imposed for purposes of applying the provision
limiting the dollar amount of the deduction. Thus, under the provision, an individual may not
claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in
order to avoid the dollar limitation applicable for taxable years beginning after 2017.
[quote=henrysd]Thus, under the provision, an individual may not claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in
order to avoid the dollar limitation applicable for taxable years beginning after 2017.[/quote]
That’s income tax, not property tax. Property tax will still be deductible if it’s due. For California property, that means the installment due on 4/10/18 can be paid and deducted in 2017. Other states are on different calendars and there is no prop tax due at 12/31.
Isn’t property tax a special case of local tax?
It seems to the whole SEC. 11042 “LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. TAXES.” doesn’t even mention property tax. It did mention foreign real prop tax, but not related to local property tax.
Our San Diego prop tax bill is 2017 July 1st to 2018 June 30 calendar, so the 2nd installment may still be considered as 2017 tax.
[quote=henrysd]Isn’t property tax a special case of local tax?
It seems to the whole SEC. 11042 “LIMITATION ON DEDUCTION FOR STATE AND LOCAL, ETC. TAXES.” doesn’t even mention property tax. It did mention foreign real prop tax, but not related to local property tax.
Our San Diego prop tax bill is 2017 July 1st to 2018 June 30 calendar, so the 2nd installment may still be considered as 2017 tax.[/quote]
The proposed law specifically refers to IRC §164 which includes state and local property taxes.
Property and state taxes for next year can not be prepaid but do I need to pay for state for this year early? Usually pay state estimate taxes by Jan 15th. But do I need to pay by end of the year instead? Also if I estimate too much state tax and get a refund, will I still be taxed on it next year?
Only thing I know to do so far is to pay mortgage earlier so interest can be written off and pay my zoo membership early.
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