Certified Public Accountants | Business Advisors

Prepaid Real Estate Taxes

January 2018 | The Tax Cuts and Jobs Act that was passed by Congress and signed by the President limits the state and local income and real estate taxes to $10,000 in aggregate. Many taxpayers, in their attempt to benefit from the old rules, are prepaying or planning to prepay their real estate taxes that would have been paid in 2018. In a newsletter, the IRS advised taxpayers that prepaying real estate taxes that were not assessed by December 31, 2017 would not be allowed as a deduction on the 2017 tax returns even if they were paid by December 31, 2017. Therefore, Louisiana real estate taxes that are usually assessed at the end of 2018 will not be deductible in 2017 even if they are paid in 2017.

While prepaying Louisiana property taxes will not be deductible, those who own property out of state may be able to prepay in order to claim a deduction. For example, out-of-state property holders with property taxes assessed in July 2017 (for the period July 1, 2017 - June 30, 2018) that will be paying in two installments with one due in 2017 and the second in 2018 may pay the second installment by December 31, 2017 and claim a deduction on the 2017 return.

If you have any questions or would like to request additional information regarding the Tax Cuts and Jobs Act, please contact our office at (225) 927-6811.

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