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Real Estate Tax Prepayment - IRS Clarification/Confusion?
Wednesday, December 27, 2017

Accountants have generally been advising their clients to prepay if there is any possible tax advantage to gain.  Today, the IRS issued an "Advisory" that tries to clarify what exactly qualifies as a deduction when people prepay their real estate tax bills.  

The bulletin basically states that there are two requirements for property taxes to be deductible in 2017.  They are:
  • They were paid by the taxpayer in 2017.
  • They were "assessed" by the city/township where the taxpayer lives in 2017.
The examples in the bulletin cite either case and try to walk you through the situation where a prepayment would qualify and when it would not.  To qualify under this standard, it really comes down to whether or not the place where you live has assessed the taxes you have prepaid.

Obviously, this "clarification" has created much confusion, coming this late in the year and after some time has passed from the signing of the tax bill.  Please note this is not a definitive interpretation - it is guidance, is not legally binding, and is subject to change. 
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