Pasternak & Fidis Reporter

December 26, 2017

Update: Prepayment of Montgomery County Real Property Tax

This morning, the Montgomery County Council, by a vote of 7-1, approved prepayment of 2018 county real property taxes.  Click here for the Montgomery County website that provides instructions for prepaying the tax.  Please bear in mind that it is possible that the IRS will take the position that the prepayment of 2018 real property taxes will not result in a 2017 income tax deduction.

If you are subject to the alternative minimum tax (AMT) for 2017 federal income tax purposes, there will be no federal income tax benefit resulting from the prepayment of your 2018 real property tax, but you will realize a state income tax benefit.

As a reminder, if your home is subject to a mortgage, it is generally a good idea to prepay your January mortgage installment in order to accelerate the interest deduction.  This year, if your total mortgage indebtedness exceeds $750,000, it is particularly important to prepay your January mortgage installment because, in 2018 and beyond, interest on home mortgages in excess of $750,000 will not be deductible.