With the anticipated changes in the Federal Tax Code, some taxpayers expressed a desire to prepay future taxes to take full advantage of the property tax deduction, and as a result, we made a change to our payment processes. However, the Internal Revenue Service updated the provisions of this deduction in an official statement made on December 27, 2017 which requires an assessment of property taxes in order to take advantage of the deduction.
An example of the impact to taxpayers is provided in their statement and reads in part, “…Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 year until July 1, 2018.”
In Texas, property tax is a personal liability of the person who owns the property on January 1. Therefore, we can’t know who will owe 2018 property taxes on a property until January 1, 2018. Tax Code §32.07. Additionally, appraisals are done at the market value of property as of January 1. Tax Code § 23.01. Although some information from prior to January 1 may be used in making that appraisal, it is not possible to actually appraise prior to January 1, 2018 according to Texas tax law.
Assessments are done by taking the appraised value and applying a formula, or for some purposes, by taking the market value of the property. Tax Code § 1.04 (8) & (9). The tax rate is then applied to the value. Entities begin setting tax rates in August each year. Therefore, the Tarrant County Tax Office, by Texas tax law, will not have assessment information available for taxpayers until later in 2018.
Guidance from the Internal Revenue Service hones in on whether or not the property has been assessed and does not reference estimates. The Tarrant County Tax Office will continue to accept 2018 pre-payments until December 31, 2017 based on the taxpayer’s desired amount. We will make no recommendations for amounts to prepay and estimates of 2018 taxes will not be provided. We make no guarantee that the prepaid 2018 taxes will be deductible in 2017. We could see additional changes in the Federal Tax Code, but the staff of the Office of Tax Assessor-Collector cannot advise you regarding your tax deductions. For that type of advice, you should consult your accountant or other tax professional.
Questions can be directed to our office at 817-884-1100.
County Telephone Operator 817-884-1111
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