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IRS provides guidance concerning prepayment of property taxes

In an Advanced Release Document (IR-2017-210) the IRS has advised tax professionals and taxpayers that prepaid 2018 state and local real property taxes may be tax deductible under certain circumstances. Generally, a taxpayer becomes liable for state or local property taxes when the tax is assessed by the local tax assessor. The assessment date is determined by state and local law. Therefore, whether a taxpayer could deduct prepaid state or local real property taxes in 2017 depends on whether the taxes were assessed before 2018. Real property taxes that are not assessed before 2018 would not be deductible in 2017 even if paid in 2017. The news release contains two examples illustrating the IRS’s position.

If a taxpayer does not have an assessed 2018 property tax bill or has questions as to whether their 2018 property taxes have been assessed, they should contact their local property tax assessor.

In addition, the IRS reminded taxpayers that charitable contributions made before the end of the year and individual retirement account contributions made by the April 2018 deadline may be deductible on 2017 returns.

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