Prepaying Your Property Taxes Might Not Lower Your Tax Bill

The governors of New York and New Jersey have issued executive orders allowing counties and municipalities to collect next year's property taxes before this year is over.

But in a statement released Wednesday, the Internal Revenue Service said these early payments may not be deductible.

Many locals have been rushing to prepay their 2018 property taxes by the end of this month hoping to deduct those payments when they file their 2017 taxes. This is because the GOP tax bill that goes into effect on Jan. 1, 2018, caps future property tax deductions at $10,000, which could hurt some homeowners in high tax states.

The IRS now says homeowners can only deduct those prepayments if they've already received their 2018 tax assessment from their local tax authority and they pay before the end of the year.

"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the tax agency said in a statement. "State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed."

This means homeowners who are prepaying based on estimated taxes most likely won't be able to deduct those payments.