Durham, NC – The Tax Cuts and Jobs Act was signed into law on December 22, 2017, essentially changing our nation’s tax code. News reports have given the impression that residents may pre-pay their 2018 property taxes in hopes they can use the receipt as a deduction when filing their income taxes for 2017. On Wednesday, December 27th the IRS issued an advisory addressing that specific issue. While this option is possible for some states, North Carolina does not allow the deduction of tax prepayments. The IRS Advisory states, “…The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes depends on whether the tax payer makes payment in 2017 and the real property taxes are assessed prior to 2018. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.”
Durham County taxes are imposed during the annual budget process which concludes by June 30th each year. This means that the 2018 tax rate will not be established until next year and the Tax Office will send the assessments to residents thereafter.
The IRS Advisory continues… “Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.
While a number of residents have come into the tax office this week to prepay 2018 taxes, those funds will be placed in a special fund to ensure that they are not used until the 2018-2019 fiscal year as noted by state law.
For additional information, contact the Durham County General Government Call Center at (919) 560-0300.
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