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What you need to know about prepaying property taxes

Whether property owners will benefit from prepaying depends on individual circumstances and IRS policies.

Passage of federal tax cuts led many on

Passage of federal tax cuts led many on Long Island to try to prepay their 2018 property taxes. Credit: Getty Images/iStockphoto / designer491

Long Islanders are scrambling to tax receivers’ offices to beat the clock on a key deduction that will be capped starting Monday. But will prepaying certain 2018 taxes work?

Under the new federal tax law, deductions for state and local income, sales and property taxes will be capped at $10,000. Some homeowners are attempting to get ahead of the cap by prepaying their second-half 2017-2018 school taxes and 2018 general taxes. Gov. Andrew M. Cuomo on Friday signed an executive order allowing payment this month of all or partial 2018 school and general taxes in towns and counties, such as Nassau, that typically do not allow it. Suffolk County already allowed property owners to prepay their taxes.

Whether property owners will benefit from prepaying will largely depend on individual circumstances and IRS policies.

Here’s what you need to know:

Why are people rushing to prepay their 2018 taxes?

Under the $1.5 trillion federal tax bill signed into law on Dec. 22 by President Donald Trump, property owners will only be able to deduct up to $10,000 in combined state and local income, sales and property taxes starting next year.

Bill authors said that for all but a handful of states, the impact is offset by other changes in the tax code. But for many Long Islanders, that $10,000 will not be enough to cover their property taxes.

Last year, average property tax bills were $11,232 in Nassau and $9,333 in Suffolk, according to an analysis by Attom Data Solutions, a California company that tracks real estate data.

What does prepaying your taxes do?

If eligible, paying 2018 taxes before Jan. 1 will allow property owners to use that deduction without a cap one last time.

That could save you money, but how much depends on your tax bill and your tax bracket.

So which prepayments are eligible?

IRS officials said in a statement Wednesday that properties that are assessed in 2017 and the taxes on them paid in 2017 likely will be deductible, but anticipated taxes are not.

So even if people pay early, that payment is only eligible for the deduction if it meets those IRS guidelines. Before Wednesday, local officials did not know whether the payments would be deductible even as thousands were rushing to pay. Some town officials in Nassau say the guidelines are still unclear.

Which taxes can be prepaid, and which can’t?

Cuomo’s order applies to prepayment of school and general taxes to towns. But again, the IRS cautioned that those payments are only eligible for the deduction if the taxes have been assessed in 2017.

Officials in villages across Long Island have said residents can’t prepay their village taxes because many villages have not yet prepared their 2018-2019 annual budgets. Those villages operate on a fiscal year that ends May 31 and they have not determined a tax levy or held the required public hearings, and would not be able to do so before Dec. 31.

The villages include Floral Park, Freeport, Garden City, Malverne and Rockville Centre in Nassau and Port Jefferson and Southampton Village in Suffolk.

Does prepaying make sense for me?

If you itemize your deductions and your typical amount of state and local income, sales and property taxes is higher than the new $10,000 cap, then you could save some money by prepaying if you meet IRS guidelines and have a current assessment.

If you take the standard deduction, the change doesn’t affect you and there’s no reason to prepay.

If you pay your taxes through your mortgage lender, call your lender and ask what your options are.

According to The Washington Post, if you pay the alternative minimum tax, you are not eligible for the SALT deduction in the first place, so prepaying won’t help if you fall into that category.

How long do I have to prepay? Where do I go to do so and when are they open?

Once you’ve done your research, you’ll need to head to your town receiver’s office before the New Year.

A number of town receivers have extended hours to accommodate the long lines. Here’s a list.

Nassau’s three towns will allow residents to mail their 2018 tax payments with a check dated in 2017 and with a 2017 postmark.

If I am not going to prepay my taxes in 2017, what’s my deadline?

In Nassau County, the first property tax payment for 2018 is due between Feb. 10 and 13. In Suffolk County, the first property tax payment covering the period between Dec. 1, 2017, and Nov. 30, 2018, is due Jan. 10.

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