Pasternak & Fidis Reporter

December 28, 2017

Update: IRS Announcement regarding deduction of prepaid real property taxes

The IRS announced yesterday that it will not allow a 2017 tax deduction for prepayment of real property taxes that have not been assessed prior to 2018.  You can view the IRS announcement here.

Maryland and Virginia
Example 2 in the IRS’s announcement clearly is applicable to Maryland and appears to be applicable to all counties and cities surrounding the District of Columbia.  Accordingly, pursuant to the IRS announcement, no 2017 deduction will be allowed for prepayment of local real property taxes in Maryland and Virginia.

District of Columbia
The 2018 assessment date for the District of Columbia was January 1, 2017; the 2018 tax year runs from October 1, 2017 to September 30, 2018; and the lien date for tax year 2018 was October 1, 2017.   It appears, therefore, that payment of the 2018 D.C. real property tax is deductible for 2017 if paid before the end of this year because the assessment was made and the lien took effect prior to 2018 (even though the payments are not due until March 31, 2018 and September 15, 2018).