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Real Estate Tax Pre-payment for 2017 and the "Tax Cuts and Jobs Act"

There is a lot of information currently circulating about the "Tax Cuts and Jobs Act", (TCJA) which the House and Senate is expected to vote on later today or Wednesday. The professionals at SS&H are working hard to stay up-to-date on what the proposed changes mean to our clients and colleagues. If and when this legislation is signed by the President, we encourage you to contact your SS&H team member or your tax advisor.

Some changes to the legislation, if passed through Congress and signed into law by President Trump, could take effect as early as February 2018, and will not retroactively affect 2017 tax return filings. This does not mean, however, that planning for the proposed changes should be overlooked within the next two weeks. One area that presents an opportunity to be proactive on is the pre-payment of real estate taxes for 2017. The TCJA will limit the deduction allowed for real estate taxes and state and local taxes paid to $10,000. Pre-paying and deducting these taxes on your 2017 tax return, instead of waiting to pay in 2018, could allow taxpayers to take advantage of the tax deduction that would otherwise be lost on their 2018 tax return.

As with many items regarding tax planning, this is not an appropriate strategy for all taxpayers. For example, the alternative minimum tax (AMT) is a supplemental income tax that adjusts regular income and limits the tax benefits from a variety of deductions and completely disallows the deductions for state or local taxes paid. Therefore, if a taxpayer is subject to AMT, it may not make sense to pre-pay a tax that would have no beneficial tax benefit for either 2017 or 2018. In addition, depending on a taxpayer's unique situation, utilization of the strategy could result in new AMT requirements.

If pre-payment of 2017 real estate taxes is an appropriate strategy for you, please be aware that pre-payment guidelines vary by state and county level. It is imperative to consult your County Treasurer's website and look for prepayment instructions to ensure your payments will be applied correctly. In addition, you will need to notify your escrow holder if your real estate tax payments are made from an escrow account.  

Cook County Treasurer Maria Pappas is currently accepting 2017 pre-payments online, via mail and in person.  Below are the links to pre-payment instructions for both Cook County, as well as the larger surrounding counties.

Cook County, Illinois

Please visit https://cookcountytreasurer.com/prepayment.aspx

This link will provide you with the information you need on pre-paying your 2017 real estate taxes whether you are paying electronically online, by mail or in person in Cook County.

Lake County, Illinois

Please visit http://www.lakecountyil.gov/539/Pre-Payments 

This link will provide you with the information you need on pre-paying your 2017 real estate taxes whether you are paying electronically online or by mail in Lake County.

DuPage County, Illinois

Please visit https://www.dupageco.org/Treasurer/1828/
 

This link will provide you with the information you need on pre-paying your 2017 real estate taxes whether you are paying electronically online, by mail or in person at the DuPage County Treasurer's office.

McHenry County, Illinois

Please visit https://www.co.mchenry.il.us/county-government/departments-j-z/treasurer/advance-tax

This link will provide you with the information you need on pre-paying your 2017 real estate taxes in McHenry County.

December 19, 2017