In the wake of the passage of the federal tax law, many of our clients have been asking the following question: Can I prepay my 2018 real property tax and deduct the payment on my 2017 return? The question is prompted by the fact that state and local tax deductions will be limited to a total of $10,000 starting in 2018. The answer to the question depends on where the real property is located. In summary, the District of Columbia, City of Alexandria, and Arlington and Fairfax Counties all have procedures for prepaying 2018 real property taxes; Montgomery County does not.
It is important to note that there may be no benefit of prepayment depending on (i) how the federal tax law is interpreted, (ii) how much you actually owe in 2018, and (iii) whether you take the new, higher standard income tax deduction in 2018. It is also important to note that, if your real property tax payments are made through a mortgage escrow arrangement, you will need to notify your mortgage lender in order to avoid duplicate payments in 2018.