If your government hasn't billed you for 2018 RE taxes, DON'T PREPAY

[nitpicker]

I did.

Then the next day, the IRS came out with this notice:

https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017

My local government goes thru a two-step process, first valuing real estate in January each year (called property assessment) and then billing taxes after the county board sets the tax rate in April.

Thus, I'm not eligible to take a deduction for the prepayment.

I have already requested my refund. It may take up to two months to arrive.

Yes, I know I will have to pay the county eventually, but meanwhile the money will be available if s*** happens.

[marylandblue]

1. I did the same, but I am not requesting a refund

I think the IRS interpretation may be challenged in court.

[Lee-Lee]

5. I dont think a challenge would go anywhere

If a challenge was successful it would open the door to all kinds of tax evading schemes where you prepay expenses that haven’t even been billed yet to get taxes lower- and it would be used by businesses mostly.

They won’t ever open the door to allowing you to prepay bills that don’t even technically exist yet just for purposes of lowering taxes.

Once they did that would allow a business having a great year to “prepay” rents, equipment payments, all kinds of things that good year to escape paying taxes and then on more lean years where they are not profitable not face those costs or the risk of losing that deduction since they don’t have enough profits to take it from.

[marylandblue]

6. Taxes and other bills are generally treated differently anyway

In this case, they specifically excluded prepaying income tax, but not prepaying property tax, even though by your reasoning they did not have to exclude prepaid income tax, because you never incur those taxes early. So it can be argued that by leaving out property taxes they automatically allowed you to deduct them even if not bulled yet. It's worth a shot if you have the cash.

[fescuerescue]

2. It doesn't really hurt and it could help.

Worst case is the your local government gets badly needed funds a weeks early, and you do benefit from that.

I've read that a number of locals are quite happy as it has solved some cash flow issues they were experiencing.

[SharonClark]

3. Our county sets assessments in May, 1st payment is due 9/30, 2nd is due 3/30.

So we could pay now for 3/30/18 without an issue.

[NCTraveler]

4. Most local tax collection agencies make it pretty easy to find this information.

Our county send it's preliminary findings to the Florida Dept of Revenue in July. The valuation process actually starts in May.

Tax bills are mailed out in our area in November.