The Internal Revenue Service cautioned Wednesday that not all property-tax prepayments can be deducted amid a rush of homeowners paying their 2018 property taxes before the Republican tax law takes effect in January.
The IRS said property taxes that haven't been assessed before 2018 won't be deductible on 2017 tax returns. State and local law determines when property taxes are assessed and those dates vary by location, the IRS said.
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"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the IRS said in its advisory.
The new tax bill signed into law on Friday caps the amount that tax filers can deduct in state and local income, sales and property taxes at $10,000, beginning next year.
Many homeowners in high tax states like Massachusetts, New York and California have been scrambling to prepay their 2018 property taxes before year-end in order to claim a full deduction on their 2017 tax return.
But many municipalities don't have full 2018 property tax bills ready.
Officials in New York's Westchester County said Tuesday that the county wouldn't be able calculate the final tax obligations for each of its municipalities before the end of the year. In New Jersey, most towns have calculated the property tax bills for the first and second quarter of 2018, but not for the third and fourth quarter.
The IRS also cited a number of provisions that taxpayers can still deduct in 2017. "Time remains to make charitable donations," the advisory said.
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(END) Dow Jones Newswires
December 27, 2017 18:48 ET (23:48 GMT)