How to pay those 2018 real estate taxes early
This year could be last time to take deduction
Time is running out for homeowners in Allegheny County who want to take what could be their last shot at deducting real estate taxes on federal tax forms.
New rules in the Republican tax overhaul, which take effect Jan. 1, could effectively eliminate the real estate tax deduction for many families. Instead, they’ll be better off next year taking the increased standard deduction, rather than attempting to lower their tax bill by itemizing expenses.
The Allegheny County treasurer’s office has been taking numerous phone calls from people who want to know how to prepay their 2018 taxes in order to take the deduction on their 2017 tax forms. So how is that done? The window of opportunity for prepaying real estate taxes closes next week.
An official in the county treasurer’s office said Friday that the deadline for prepaid taxes will be Thursday, Dec. 28.
Postmarked envelopes do not apply in this case. The check must physically be in the treasurer’s office that day in order for the taxpayer to be credited for making a payment in 2017.
To satisfy the 2018 real estate tax obligation, all a homeowner would need to do is pay the discounted amount of the 2017 tax.
Taxpayers who pay their Allegheny County real estate tax bill on or before March 31 are entitled to a 2 percent discount. For example, a hypothetical tax bill of $100 would be discounted to $98 if paid prior to April 1.
If a homeowner paid the real estate tax last year at the discounted rate, that person should simply pay the same amount for 2018.
To make an early payment, write the property’s parcel identification number and put in parentheses the year “2018” on the check or money order. Then mail it to: Allegheny County Treasurer Office, Room 108 Courthouse, 436 Grant St., Pittsburgh, PA 15219.
In the lower right corner of the envelope write: Attention: Marilee
“We have always accepted early payments for those county residents who go to Florida or other states during the months of January, February, March and April for them not to be delinquent if they are out of town during tax season,” said a worker in the county treasurer office who declined to be identified.
The official deadline for county real estate taxes with no penalties or interest is April 30. So why do all this? “The advantage of prepaying real estate taxes before the end of the year is next year you might lose the deduction completely,” said James Lange, a Squirrel Hillbased accountant, attorney and author. “But this year, you will be able to deduct the taxes, assuming you are itemizing your deductions. And this year, you will be able to deduct at a higher rate.”
The overall deductible limit for 2018 will be $10,000. This limit applies to a combined total that will include state and local income taxes, real estate taxes, sales tax and personal property tax.
There is no limit on state and local tax deductions for 2017 for taxpayers who itemize those expenses, which is why families might have been better off itemizing rather than taking the standard deduction until now.
Meanwhile, the bill, which passed both houses of Congress this week nearly doubled the standard deduction — which reduces the amount of income on which you are taxed. Last year, singles could claim $6,350, while new rules bump that up to $12,200. For married couples, the standard deduction goes from $12,700 to $24,000.
Mr. Lange said the same rules for prepaying 2018 real estate taxes do not apply for business owners who wish to prepay their 2018 city of Pittsburgh income tax.
“You can pay your 2018 estimate for real estate taxes and deduct it,” he said. “But you cannot make an income tax deduction in 2017 for 2018 income tax to the city. You are not allowed to pay that tax in 2017 and deduct it for 2017.”