U.S. IRS Reiterates Position Limiting Deduction of Pre-Paid 2018 Property Taxes
The following article was originally published by Pete Scott on https://www.worldwideerc.org.
In a letter to the Attorney General of New Jersey released 29 June 2018, the U.S. Internal Revenue Service (IRS) restated and supported the position it took in December of 2017 that prepayments of 2018 property taxes in 2017 are allowable as 2017 deductions only if the 2018 tax has been assessed.
The latest IRS letter makes clear that it is not backing away from its earlier position. The correct answer will eventually have to be decided by the courts.
Following enactment of the Tax Cuts and Jobs Act of 2017 (TCJA), which imposed an aggregate deduction limit of $10,000 on state and local income, property, and sales taxes beginning in 2018, many taxpayers sought to prepay 2018 taxes in 2017 hoping to achieve a full deduction on their 2017 returns. The TCJA explicitly forbade such deductions for 2018 income taxes, but was silent as to property taxes. Read More