The latest predictions of the proposed changes in the federal tax law appear to suggest that the following modifications will be made:
- Repeal of the state & local income tax deduction.
- Potential repeal of the real estate tax deduction.
With these possibilities, it could prove wise to pay state and local fourth quarter tax estimates in the calendar year 2017. In addition, if financially feasible, it could also be wise to pay some or all of your 2018 real estate taxes before the end of 2017. If you decide to prepay real estate taxes, you must pay them directly to the taxing authorities rather than an escrow account. Finally, remember that taxes deducted on Schedule A are added back for the calculation of the alternative minimum tax.
Contact us for further updates regarding this matter or to discuss your unique tax situation.