No, you probably shouldn’t rush out and prepay your 2018 property taxes

Agonizing over whether it’s worth rushing to prepay your 2018 property taxes in the waning days of 2017, to take advantage of a bigger deduction? Don’t bother.

Relatively few Americans can benefit from this strategy, experts say, no matter how fervently many blue-state residents want to grab every possible tax advantage before the new tax law goes into effect.

Here’s a primer on all the considerations, with the caveat that it’s still best to consult a tax professional, if possible. They’re expecting your call. James Sosinski, an accountant and partner with Clark, N.J.–based Koenig Group LLC, joked that after fielding “a thousand” client calls on property-tax prepayment, he’s starting to hear the question in his sleep.

Read: Railing against ‘economic civil war,’ New York governor Cuomo devises small step to mitigate Republican tax law’s hit

• Will the IRS allow the deduction?

On Wednesday, the IRS offered the clarification that it would allow taxpayers to deduct prepaid 2018 taxes in 2017 only if the local governmental unit to which taxes are paid has issued a bill. Many jurisdictions do create and send out bills in midsummer, to be paid quarterly, so many homeowners will, in fact, have bills for, say, February and May 2018 payments. As Sosinski put it, it’s just basic accounting: The IRS has to have an open bill to which to apply a payment.

Nicole Kaeding, an economist with the Center for State Tax Policy at the Tax Foundation, told MarketWatch that the IRS position isn’t new. “It’s not really out of line in terms of what they’ve previously said,” Kaeding explained. “Given the flurry of activity, they just reissued guidance.”

One lingering question is whether local governments that have not yet assessed 2018 taxes could somehow hasten that process, perhaps by issuing a “blanket” assessment to all homeowners which could be individualized later, Kaeding suggested. But given how little time is left in the year, that may simply not be feasible.

Read: It’s not just lobbyists who say tax reform will slash home prices

• Will it be worthwhile financially?

Many Americans for whom this strategy makes sense have higher incomes and live in high-tax jurisdictions. Such taxpayers are often subject to the Alternative Minimum Tax, Kaeding said, which ensures that they pay a minimum amount of taxes each year, regardless of how many deductions might be technically allowable.

A rough rule of thumb is that if you’ve been subject to the AMT in the past, you’re likely to be subject again this year, but it’s worth checking.

• Is it worth the logistical hassle?

Many homeowners escrow their property taxes, meaning that their mortgage servicer remits the actual payment to the local jurisdiction. Brian Faux, founder and CEO of mortgage lender Morty and a mortgage-industry veteran, said he recommends that homeowners call their mortgage servicer first to inform it that a prepayment is being made and to determine what kind of adjustments the servicer can make for 2018 collections after a prepayment is made.

As Faux put it, servicers are more than happy to sit on escrowed funds and pick up interest without paying anything out to local jurisdictions. But the reconciliation process may still be a hassle for homeowners.

And homeowners may not even have the option of slogging through that process. Owners of cooperative residences are out of luck, since co-op taxes are paid by their building’s management company, said Deborah Blumenfield, an attorney with Graubard & Blumenfield, P.C., in New York City.

Read now: Here’s what all 30 companies that make up the Dow industrials think about the tax cuts

Also: Here are the winners and losers of the new tax law

• Do you have lots of cash sitting around?

This is the single biggest consideration, Sosinski said. In order for it to make sense for a homeowner to jump through all of the above hoops, the amount to be deducted has to be pretty big — and that would rule out many homeowners.

Of all the clients who’ve flooded his phone lines and email accounts, Sosinski estimated about half are in a position to use the prepayment strategy. But his practice is centered in New Jersey, which does send year-ahead assessments.

Sosinski’s final piece of advice? If ever there was a year to pay a tax professional, this is probably it.

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