For instance, in New Rochelle, New York, where a portion of taxes due in 2018 (and already assessed) are being accepted early, residents already have prepaid about $15 million. The average annual property tax bill there tops $18,000.
“What we’re telling residents is that we’ll accept these prepayments but they should check with a financial advisor first,” said Charles Strome, city manager for New Rochelle.
Thursday morning, the line of prepaying taxpayers was out the door, Strome said.
However, unlike New Rochelle, not all jurisdictions that have said they will accept early payments have actually assessed the taxes being prepaid. That is, the taxpayer would be making estimated payments because the exact amount has not yet been determined.
And in those cases, it’s unclear whether local tax offices will reimburse taxpayers if those payments won’t count against their 2017 taxes or whether the IRS guidance will be challenged.
Something else to keep in mind: If you are subject to the alternative minimum tax, prepaying might not be beneficial. Under that formula, real estate taxes (and other local taxes) generally are not deductible.
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