It's official: If you prepaid your property taxes, you can deduct them from your taxes
Illinois homeowners who prepaid this year's property taxes at the end of 2017 can deduct that payment from their itemized income tax returns.
That's according to a letter from the U.S. Treasury Department to Rep. Peter Roskam, a Wheaton Republican, who was seeking clarification of an IRS advisory warning taxpayers prepayments might not be deductible.
Shortly after Congress passed the tax cut bill in December eliminating the unlimited property tax deduction on itemized returns in favor of a capped $10,000 deduction for 2018 and beyond, suburban homeowners flooded county treasurers' offices to prepay their 2018 property taxes to maximize their 2017 deductions. However, an IRS advisory issued in late December suggested homeowners who prepaid property taxes before properties were formally assessed would not be able to deduct those payments.
But because Illinois bills property taxes a year in arrears, the Treasury Department agreed that the IRS advisory doesn't affect Illinois homeowners, and they can deduct the prepaid property taxes owed in 2018 on their 2017 income tax returns, which are due April 17 — two days later than normal because April 15 is on a Sunday this year and April 16 is a holiday in Washington, D.C.
“I am very pleased that the IRS clarified this important issue for hardworking families in Illinois who prepaid their property taxes last year,” said Rep. Randall Hultgren, a Plano Republican. “Since the Tax Cuts and Jobs Act took effect on January 1, Illinois individuals, families and small businesses are reaping the benefits of lower tax rates, a doubled standard deduction and a doubled child tax credit.”
Roskam, who was instrumental in drafting the tax-cut legislation, sought the clarification in a letter to Treasury Secretary Steve Mnuchin earlier this month and received a response Tuesday.