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The new tax bill was officially signed into law this past Friday. Folks may have an opportunity to save thousands on their tax bills by prepaying 2018 property taxes before the clock runs out this year. Here’s who is affected.
The last week of the year is usually a quiet time in the Money Habit household for celebrating the holidays. This year, it’s looking to be a bit more hectic as we nail down some tax moves that could save us thousands of dollars if we tackle them before December 31st. One item that will benefit us and may also benefit you is the idea of prepaying 2018 property taxes now.
Depending on how large your property tax bill is and what your marginal tax rate is, getting your payment in today vs eight days from now could save you several thousand dollars.
The tax bill that just passed is going to upend the way 2018 taxes are calculated. One major change is that state and local tax deductions on income and property tax will now be capped at $10k. In 2017, however, there is no such cap on the amount one can deduct for state and local income and property taxes. Because of this, it may behoove you to dump as many state and local tax payments into 2017 as possible so you save room in 2018 for the maximum $10k you can deduct.
Not everyone will benefit from this strategy. For example, if you don’t itemize your deductions and don’t plan to in 2018, you could care less about this strategy. The