Cuomo's Executive Order and the Federal Deduction of Property Taxes in 2017

Governor Andrew M. Cuomo has signed an emergency Executive Order that will allow New Yorkers to prepay next year’s property taxes this year, before the new tax law takes effect.

Caution applies when attempting to take the added deduction on your 2017 Federal tax return (the 1040 Schedule A). Why? Because the new legislation has a provision in it that clearly states such a deduction for prepayment of property taxes will be disallowed. You can find it in Section D Simplification and Reform of Deductions and Exclusions, Item 2. of the Conference Agreement between the House and the Senate. It is on page 81 of the 560 page document.

Here is the provision quoted directly from the legislation: "The conference agreement also provides that, in the case of an amount paid in a taxable year beginning before January 1, 2018, with respect to a State or local income tax imposed for a taxable year beginning after December 31, 2017, the payment shall be treated as paid on the last day of the taxable year for which such tax is so imposed for purposes of applying the provision limiting the dollar amount of the deduction.  Thus, under the provision, an individual may not claim an itemized deduction in 2017 on a pre-payment of income tax for a future taxable year in order to avoid the dollar limitation applicable for taxable years beginning after 2017."

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