The Republican tax overhaul signed by President Donald Trump on Friday will mean that many homeowners will stop claiming their local property taxes as a deduction starting with the 2018 tax year.
But Sacramento County residents and others nationwide may still have a chance at tax savings.
Sacramento County asks property owners to pay their annual property taxes in two installments due Dec. 10 and April 10.
Many typically wait until the spring to make that second payment. This year, some experts suggest you should prepay that installment before the end of 2017 to take advantage of expiring deduction rules.
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Mark Steber, chief tax officer at Jackson Hewitt, told The Associated Press that you can deduct property tax payments that you have already been assessed for. That’s the case for 2017-18 bills sent to Sacramento County residents in the fall.
The amount taxpayers might save depends on their highest marginal tax bracket. Someone in the 25 percent bracket who prepays $2,000 could see a $500 reduction in their 2017 federal tax bill.
The county says through the end of next week, homeowners should pay their April 2018 tax bill in person at the county finance office in downtown Sacramento to ensure it’s processed.
“Here’s the deal: The April installment can be paid, if they walk into the office and pay it before Dec. 31,” county spokeswoman Kim Nava wrote in an email.
“If people would like to pay in person, they can go to 700 H Street, Room 1710. We will print out stubs for them if they don’t have them and then send them to the cashiering window to actually pay.”
County offices will be open Tuesday through Friday during regular business hours.
The county also offers online payment options including payment by credit card (with a hefty fee) or by debit card or e-check at https://eproptax.saccounty.net. Online payments may record in a timely manner, but checks mailed in will likely not be cashed until after Jan. 1, according to the county office that collects property taxes.
It remained unclear on Friday if payments mailed and postmarked prior to Dec. 31 would qualify for tax deductions under federal rules.
What about homeowners whose property taxes are paid by their mortgage servicer from an escrow or impound account?
Brent Wilson, a mortgage strategist and financial planner in Folsom, said it’s extremely unlikely that borrowers could get their loan servicer to prepay taxes on short notice during Christmas week.
A better strategy would be to pay the taxes out of pocket and seek compensation later. Let the mortgage company know you already paid your April tax installment to avoid unneeded escrow payments, or seek a refund down the road from the county or servicer.
“You’re going to have to unwind all of that come mid-April,” Wilson said.
Some creative minds have asked if they can pay their 2018-19 property taxes early to deduct them on their 2017 return. They cannot, Nava said, because the county has yet to generate tax bills for the next fiscal year.
County officials have been inundated with calls this week about prepaying property taxes after the Republican-controlled House and Senate passed the most sweeping tax changes in decades.
The tax overhaul bill, signed by Trump in an Oval Office ceremony Friday, limits married couples to $10,000 in deductions for state and local income taxes and property taxes combined. At the same time, the bill nearly doubles the standard deduction for those couples to $24,000.
That means most middle-income households will no longer itemize their property taxes and will take the standard deduction instead. Some may pay more in taxes; others less, depending on individual circumstances.