Minnesota Homeowners – Guidance on Prepaying Real Estate Taxes before December 31, 2017

The Internal Revenue Service (IRS) released guidance yesterday on the prepayment of real estate taxes. The determination of whether prepayment of real estate taxes is deductible in 2017 hinges on whether the tax was assessed prior to 2018. A prepayment of anticipated taxes that have not been assessed prior to 2018 are not deductible even if paid in 2017.

Per the Minnesota law, Minnesota has a two year cycle which begins on January 2, the assessment date, and extends through the next calendar year until the property taxes have been paid. Therefore, property taxes payable in 2018 were assessed on January 2, 2017.

Based on the guidance released by the IRS and Minnesota law, if you…

(1) own a home in Minnesota and,

(2) are not subject to Alternative Minimum Tax (AMT) and,

(3) it makes economic sense and you have the funds available

…you may want to consider prepaying your 2018 real estate taxes.

Look to Lurie for future updates on the upcoming changes on tax reform. If you have any questions or would like additional information on how this change could affect you or your business please contact your Lurie advisor.

Matthew Brown, CPA, JD

Partner, Tax Services





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