The 2017 GOP Tax Bill: Should you Pre-Pay?

We have received many calls regarding prepaying real estate taxes for 2018 prior to December 31, 2017 based on the recently passed Tax Cuts and Jobs Act (TCJA). We apologize for the short notice, but like most tax laws, it is a complicated piece of legislation that will affect individual taxpayers differently based on a number of varying factors. Further, the most recent notice issued by the IRS (12/27/2017) has caused additional confusion by making the benefit of prepayment dependent on individual towns’ property tax assessment schedules and discretion.  Here is the long and short of it:

  1.   State, local, sales, and property tax deduction changes: The deduction for state and local income tax, sales tax, and property taxes (“SALT deduction”) will be capped at $10,000.
  2.   If you do not escrow your real estate tax payments you may benefit from prepaying the February 1, 2018 payment.
  3.   If you escrow your real estate tax payments and prepay the February 1, 2018 payment you will be overpaid with your city or town. It will then be up to you to work with the town to receive your refund. You are not able to reduce your escrow account due to the overpayment with your city or town.
  4.   You may also benefit from prepaying your January 15, 2018 Massachusetts estimated tax payment on or before December 31, 2017.

Additional information regarding the GOP Tax Bill and how it may affect you can be found here: