In response to the federal tax bill signed into law on Dec. 22, 2017, New York state governor, Andrew M. Cuomo, signed an emergency executive order allowing individuals the ability to prepay next year's New York property taxes. The order is intended to protect taxpayers from the impact of the GOP tax bill, which caps the deductibility of state and local taxes at $10,000. By allowing individuals to pay a portion or all of their 2018 property taxes in 2017, the executive order aims to provide individuals with options as a result of the tax bill's negative financial impact.
The executive order includes two actions. It authorizes local officials to immediately levy taxes and allows taxpayers to make partial payments early. The governor has authorized local governments to immediately issue warrants to levy property taxes by the end of the year. Officials should issue warrants for collection of taxes and deliver them to local tax collectors, no later than 11:59 p.m. on Thursday, Dec. 28, 2017. This will allow individuals to pay their property taxes in 2018 during the 2017 calendar year and deduct the full amount at the federal level.
The executive order also suspends local laws limiting the ability of taxpayers to make payments of property taxes early, by allowing a portion of the taxes to be paid early and under the current federal tax law. Local tax collectors are authorized and directed to accept partial payments of warranted taxes from property owners until the close of business on Friday, Dec. 29, 2017. Online payments may be made until 11:59 p.m. on Sunday, Dec.31, 2017. Payments made by mail must be postmarked on or before Dec. 31, 2017 to be considered timely paid.
While the above is specific to New York property taxes, other locations throughout the country have taken action by allowing individuals to prepay their property taxes as well. Therefore, individuals should contact the taxing authority of the real estate's location to find out if they allow prepayment of the 2018 property taxes.
Just because prepayment may be allowed does not mean that everyone should be prepaying their property taxes. The deduction may be lost if the taxpayer is in Alternative Minimum Tax for the year. Therefore, proper planning of your 2017 tax liability is necessary to determine if you should prepay your 2018 property taxes.
For more information contact your professional at UHY LLP in one of our many locations.