SAN DIEGO (CNS) - San Diegans are rushing to beat a looming change resulting from the recently enacted federal tax reform bill that limits the deductibility of property and other assessments, county Treasurer-Tax Collector Dan McAllister said Thursday.
The property owners are impacted by a provision in the bill, signed into law by President Donald Trump last week, that caps state and local tax deductions at $10,000 for those who itemize their returns.
The change unleashed a flood of homeowners wishing to prepay their property tax bill before Jan. 1, so that this year's tax rules would apply, allowing a higher deduction.
McAllister said compared to this time last year, 22,000 more bills had been paid, as of Wednesday night.
Roughly 18,000 payments arrived in the six days after the tax law was signed, amounting to about $80 million, he told City News Service. He said that in a similar period last year, 3,000 payments were received, totaling $14 million.
"The number of payers is up, the dollar amount is up," McAllister said. "We take it as a good sign, as people are doing things that will help them down the road."
He said he estimates that the county could receive an additional $60 million over the next three days. Treasurer-Tax Collector offices are open on Friday, and electronic payments can be made over the weekend.
On Wednesday, the IRS informed tax professionals that deductions will be accepted for prepayments that apply to 2018 as long as the local government assesses and bills the property this year.
The county of San Diego mails its bills in early October and provides for two installments, one normally due Dec. 10 and the second on April 10. The early payments being made now are to make sure the second installment is deductible -- if the taxpayer believes his or her state and local tax deductions will climb over the $10,000 threshold.
Deductions won't be accepted for paying anticipated property taxes that haven't yet been assessed or billed, such as for the 2018-19 fiscal year, the IRS advised.
Financial experts say taxpayers should consider whether prepayment would put them over the figure where the Alternative Minimum Tax would kick in, or if they already pay the AMT, which would negate any prepayment benefit. It's also suggested that homeowners consult with their mortgage-holder if they pay their property taxes via an escrow account, so they don't accidentally pay their property tax twice.
McAllister recommended that San Diegans talk to their tax preparer, CPA or financial adviser before paying their bill early. He said that after consulting his adviser, he made a prepayment himself.
He said the best way to pay is by using a free e-check online at sdttc.com
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