Nightflyer

OK, let us try not to get political.

However, I usually pay my property tax, about $6500, in January.

I paid last January. Some people are talking about paying this year's tax before December 31, due to the tax law changes.

I am not sure that is a good idea, as I think, but I am not sure, I may get hit with the Alternative Minimum Tax in 2017, but not in 2018.

My charitable deductions, with my property tax, will certainly put me over the new 24,000 standard deduction in 2018. I think that is the reason I should wait.

Has anyone else been thinking about this and have you come up with a good answer?

busdriver12

The point may be moot, as some states won't even allow it. But if you're going to get hit with the AMT this year, it could be futile. I'd run it through a tax calculator and see what it says.

Albief15

https://www.thetaxadviser.com/news/2...201718054.html

One site's opinion....

Check6Viper

Albie, that post is about state income taxes. State property taxes are under different rules.

Albief15

Doh. Sorry.

KnightFlyer

State and local taxes: Prepaying state and local income and property taxes that are due early next year can reduce your 2017 federal income tax bill, because your total itemized deductions will be that much higher.

Warning: Prepaying is not a no-brainer: The prepayment strategy can backfire if you will owe the alternative minimum tax (AMT) for this year. That’s because write-offs for state and local taxes are completely disallowed under the AMT rules and so are most miscellaneous itemized deductions. So prepaying these expenses may do little or no tax-saving good for AMT victims. Solution: ask your tax adviser if you’re in the AMT mode before prepaying state and local taxes or miscellaneous deduction items. The good news: both the House and Senate tax reform bills would eliminate the AMT for 2018 and beyond. Fingers crossed!

---------------

Starting next year, the new law limits your deduction for state and local income and property taxes to a combined total of $10,000 ($5,000 if you use married filing separate status). Foreign real property taxes can no longer be deducted. So no more property tax write-offs for your place in Cabo. However, you can still choose to deduct state and local sales taxes instead of state and local income taxes.

Year-end planning impact: Traditional year-end tax planning advice includes prepaying state and local taxes that would otherwise be due early next year. That way, you get a bigger deduction on this year’s return. However, the new law says you cannot get any tax-saving benefit from using this strategy to prepay state and local income taxes. Specifically, you cannot claim a 2017 deduction for state or local income taxes that are imposed for a tax year beginning after Dec. 31, 2017. How this rule could be enforced is a mystery. The good news: you can still prepay state and local property taxes before year-end and claim a 2017 deduction. That could be a really good idea in view of the new $10,000/$5,000 deduction limitation that takes effect next year. However, if you will be an alternative minimum tax (AMT) victim this year, deductions for state and local property taxes (prepaid or otherwise) aren’t allowed under the AMT rules. So prepaying could do you little or no tax-saving good.

8-smart-tax-moves-to-make-before-the-end-of-the-year-2017

10-things-you-need-to-know-about-the-new-tax-law-2017

Nightflyer

I just saw a typo in the title, but I don't know how to fix it.

However, the information you all presented seems to agree with my assessment.

For the record, the property taxes are for 2017, can be paid in December or January without penalty.

I am almost certain the AMT will get me, so I will wait.

Thanks for your help.

busdriver12

If you wait, your property tax + state tax deduction will be limited to 10K in 2018, so you would need at least 14K in charitable deductions to make it worthwhile to itemize. We lose employee tax deductions.

It's getting complicated.

Fdxlag2

It is actually getting less complicated, but can’t you add mortgage interest to your charity to get above itemizing threshold?

busdriver12

If you consider taking away major deductions that make it worthwhile to itemize as being less complicated, okay then. There are other new provisions that make it infinitely more complicated for my family, though.

Yes, you can still fully deduct your mortgage (below 1 million), but I was only addressing the deductions the OP spoke of. There are still some deductions available, and if they're going to add up to more than 24K filing jointly, better to itemize for 2018. But even if he's not going to be subject to the AMT in 2018 (unlikely because they upped the income trigger), he's going to be limited to 10K in property tax deductions for 2018. It's hard to figure out without knowing all the numbers.

Another possibility is paying enough property tax in 2017 so there is only 10K left of property/state taxes to pay in 2018, since that's all you can deduct anyways. That is, if it's an option.