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IRS Announces Property Tax Prepayments May Not Be Deductible

December 28, 2017

By: Brendan Lynch

One of the outstanding questions from the new tax bill is whether individuals can prepay their 2018 property taxes in advance to claim the full deduction in 2017. The IRS announced in an advisory late yesterday that prepaying 2018 state and local real property taxes may only be tax deductible under certain circumstances. Specifically, the IRS advisory states that a “prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.” Thus, it becomes a question of state property tax law.

In Florida, assessments are as of January 1st of each individual year, but properties are not actually assessed until later in the calendar year. Truth In Millage – TRIM – notices come out in August 2018 for the 2018 property tax assessments, and the assessments are determined throughout the year until that point. Therefore, the IRS advisory appears to not allow for prepayment of 2018 property taxes in Florida in order to claim 2017 deductions, as the assessments will not be completed by January 1, 2018. This is the position of many elected Tax Collectors across the state as well, including Orange County Tax Collector Scott Randolph. This does not impact payment of 2017 property taxes, which are due as of March 31, 2018. Those 2017 property tax bills were mailed in October and are in the hands of property owners now.

The full IRS advisory can be found here: https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017

Lowndes, Drosdick, Doster, Kantor & Reed, P.A. has a Property Tax Group that can help with all your property tax questions, from initial review of the valuations on the TRIM notice through official challenges at the Value Adjustment Board (VAB), as well as filing a civil suit challenging an adverse decision by the VAB. We also deal extensively with various property tax exemption approvals and denials.


S. Brendan

A Virginia native originally with aspirations to become a journalist, Brendan Lynch fell in love with Florida and has made it his home since 2005. He represents both commercial and residential property land owners, as well as tenant business owners, in issues of property tax valuation and eminent domain/condemnation.

Brendan assists property owners throughout Florida with their property tax appeals, including assessment reviews, direct negotiations with county property appraisers, appeals to the Value Adjustment Board, and trial and appellate court proceedings. His clients include apartment projects, big box stores, condominiums, commercial strip centers, hotels, residences, student housing, vacant land, and other retail buildings.

With broad experience handling many different types of exemption applications, Brendan often assists clients from the application stage through challenges, to denial of any exemption, through trial and appellate court proceedings. These exemption applications include agricultural, conservation easements, healthcare, homestead, military housing, non-profit, religious, and senior living.

Typically, the eminent domain cases involve a governmental entity (Florida Department of Transportation, county, city, expressway authority, or other state agency) or private utility with condemnation powers seeking to take land from the property owners. Interestingly, Brendan has also represented condemning authorities on special projects – bringing a perspective from both sides of the table.

Brendan’s love for his adopted hometown of Orlando is reflected in his commitment to the community and its cultural diversity. A long-time advocate for the arts and current Chair of the United Arts of Central Florida’s Board of Directors, Brendan recently helped steer the largest Collaborative Campaign in the organization’s history (over $3M). He has also served in leadership roles for the Adult Literacy League, the Orange County Teen Court, and the Heart of Florida United Way.

ICONIC CASES

  • Achieved property tax assessment reduction for internationally-known hotel from $421 million to $259 million, resulting in millions of dollars of savings.
  • Represented a national building contractor in its application for military housing exemptions, resulting in a change in Florida law and a savings of $17 million dollars for the client.
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