IRS Throws Wet Blanket on Prepayment of Real Estate Taxes

People lined up to prepay their taxes at the McHenry County Treasurer’s Office.

As I write this, people are lined up at the McHenry County Treasurer’s Office to pay their real estate taxes before the end of the year.

The reason is obvious.

The new income tax law passed by Republicans and signed by President Donald Trump limits deductions for local property taxes and state income taxes to $10,000.

There are about 3,000 counties in the United States.

McHenry County homeowners live in one of the top thirty property tax counties in the country.

McHenry County homeowners line up to avoid paying income taxes to the country whose flag flies in front of the Treasurer’s Office in Woodstock.

But as taxpayers who could afford to pay next year’s taxes now, the IRS was issuing an “Advisory” saying that only if taxes have been assessed in 2017 can one prepay them.

Since next year’s taxes were assessed in 2017, that seems to mean that residents will be able to deduct whatever is billed this coming spring.

But prepaying more than one year’s bill may not be allowed.


IRS Throws Wet Blanket on Prepayment of Real Estate Taxes — 37 Comments

  1. Why am I not on this picture? I just paid my $400,000 property tax bill. Go Mr. Jack D. Franks! McHenry countians stand with you! Stay tuned…tic, tock, tic, tock, tic, tock…

  2. Jack D. Franks is a democrat. The year 2018 begins on January 1, 2018, 12:00 am…tic, tock, tic, tock, tic, tock, tic, tock…

  3. If your anticipated 2017 residential real estate taxes (to be paid in 2018 on your home) and State of Illinois income tax are anticipated to exceed $10,000, then, if you are able, you should pay an amount equal to your 2016 real estate tax bill (payable in 2017).

    You will then be able to deduct all of your State income tax payable next year up to the limit of $10,000.

    Real estate taxes are assessed, billed, levied and paid in different manners in almost every State, I doubt that the IRS has the man power to audit common folk over this issue.

  4. While McHenry and Lake County residents have had the value of their property assessed by the township assessors, the actual property taxes have not yet been assessed.

    Nor will they be for several more months until the appeals process has run its course, the deadline for taxing bodies to file any abatements has passed, and the counties generate their final tax rates for all of the taxing bodies.

  5. Awesome video Swordfish. Too bad the unwashed will not heed the warnings.

  6. I believe the only 2017 assessments not yet completed are a handful of commercial appeals in Algonquin Township. All other Townships are closed.

    The issue of the $10,000 limitation does not apply to commercial properties only owner occupied residential.

    Every lawyer and accountant that I have talked with concerning this issue agrees that if you have the liquid funds, make an advance payment of the RE taxes, nothing to lose and a lot of dollars to gain in federal tax savings.

  7. Remember to thank your McHenry County Republican super-majority (at both the county and municipal level) for your high property taxes!

  8. If it’s assessed and billed, yes prepay.

    IRS is not clear on just assessed and good luck with that.

  9. Good job sunshine blogger quickly deflecting responsibility to enrage compassionate conservatives on this blog. We stand with you! Tic, tock, tic, tock…

  10. @Warren Sanders

    The county and municipal governments can and should do much more to get property taxes lower, but a large share of the blame belongs in Springfield.

    One of the main reasons that school taxes are so high is that Illinois is in the small minority of states that allow teachers to strike.

    Illinois has some of the highest paid teachers in the nation.

    One of the main reason that pay for first responders is so high in this state is that Illinois has crazy arbitration rules that don’t allow arbitrators to consider the financial impact on communities of their decisions.

    Illinois has some of the highest paid cops in the nation.

    Add in prevailing wage laws and grossly overgenerous pensions mandated by state law, and there is only so much that local units of government can do.

    Having said all that, they should do much better than they are doing.

  11. Didn’t need to stand in line by the Treasurer’s Office.

    Just fill out the required form, write a check, put both in an envelope addressed to the Treasurer and put in drop box by front door.

  12. According to IRS:

    “In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.”

    Very weird wording by IRS per: “and the real property taxes are assessed prior to 2018”

    Seems like should read: “and the real property has been assessed prior to 2018”

    Real residential property HAS been assessed already during 2017 for townships in McHenry County.

    Wonder if any holdovers left in fed IRS who ran scam back in 2009-2010 and violated rights of some tea party groups.

  13. Billy Bob likes to ignore the other 91 Republican-majority counties in Illinois with property taxes lower than McHenry County when he tries to blame it all on Democrats.

  14. High property taxes in our County mainly due to bloated school administration staffs, highly overpaid school administrators and teachers, teacher unions which hold kids and parents hostage to their demands, high pension costs.

  15. Bred winner likes to ignore the fact that none of those variables are unique to McHenry County, and that 91 Republican-majority counties in Illinois have nearly identical school admin and teacher costs per resident… yet… wait for it… have lower taxes.

  16. I didn’t blame it all on Democrats. Do you have a problem with reading comprehension?

  17. It is factually inaccurate to claim that “…counties in Illinois have nearly identical school admin and teacher costs per resident…”

    The amount spent per pupil (in many different categories) can be checked at the Peer search tool (under Data tolls heading on sidebar) on the government website of National Center for Education Statistics

    Amounts spent are very different, and ordinarily vary with the means of the community.

    In McHenry County, the amounts spent are FAR above the means of the community.

    Thus the higher comparative levy divided by the lower comparative EAV results in wildly higher tax RATES.

    Woodstock D200 is the most egregious example of this in the County.

    You might want to look at their Peer Search results to see just how far above the average they are in most expenditure categories.

  18. Hey Bishop, Clean up your act!

    In re James Francis Bishop, 15PR0124
    Disposition: Suspension for a specified period
    Effective Date of Disposition: December 9, 2016
    End Date of Disposition: January 8, 2017
    Definition of Disposition: Suspension for a specified period reflects a determination that the lawyer has engaged in misconduct and that the misconduct warrants an interruption of the lawyer’s authority to practice law during the suspension period, which is a fixed period of time identified in the Supreme Court’s order. The lawyer is not authorized to practice law during the period of the suspension.
    Information: Mr. Bishop, who was licensed in 1966, was suspended for thirty days. While representing the sellers in a commercial real estate transaction, he mismanaged $1,282.31 in funds that he had agreed to hold as ‘fluff money.’

  19. Our paparazzi freeloader sunshine blogger accomplishes his goal one way or the other; red meat for his circus attack animals. Impressive how we landed against public educators and schools again. Stay tuned…tic, tock, tic, tock, tic, tock, tic, tock…

  20. Let’s face it, our Republican congress representatives, Hultgren and Roskam, made a bad tax situation in McHenry County worse.

    Their votes will drive many potential home buyers away from homes with property taxes that are higher than $10,000.

    So McHenry County homeowners will get hurt once again except this time it’s not from liberals who spend too much, rather it’s conservatives who believe an ideology over representing the best interests of their constituents.

    But it gets better because of the $1 trillion deficit that we will incur over the next 10 years—all for tax cuts that largely benefit the rich.

    It’s hard to believe that anyone is going to vote for any Congressional Republicans in the upcoming year.

    These Republicans have really ignored the regular person and created a $1 trillion deficit that we will incur over the next 10 years. So happy the Republican Party is all about serving the rich and entitled.

    In the meantime us regular taxpayers are getting sold down the river.

    I’ve had it!

  21. Scott is correct.

    According to details released everyone in McHenry who is prepaying is giving away free loans.

    Also a majority of you who are prepaying probably have AMT which is going to be a wash.

    You are literally giving away money for free. 🙁

  22. So, Kay. Jim Bishop received one 30 day suspension in a 51 year legal career.

    What does that have to do with his opinion on the federal income tax effect of prepaying real estate taxes?

    What is your name, so we can check your record?

  23. McHenry County schools are sacrificing the economic well-being of their communities to fund lavish compensation for employees, except for Cary district managed by Coffey and other diligent school board members.

    Coffey and his team proved that a school district can live within the means of its community and thrive (as measured by academic results).

    I fear his analysis of tax prepayment is correct, that the ‘assessment’ referenced in irs memo was misinterpreted by pre-payers including myself.

  24. IR-2017-210, Dec. 27, 2017

    WASHINGTON – The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

    The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

  25. But we all voted for Roskam and Hultgren so we wanted this tax shelter eliminated…correct?

    Plus, don’t forget, our huge tax breaks will more than pay for this lose of deduction.

  26. From IRS Publication 530

    Deductible Real Estate Taxes

    You can deduct real estate taxes imposed on
    you. You must have paid them either at settle-
    ment or closing, or to a taxing authority (either
    directly or through an escrow account) during
    the year.

    So, key words are “imposed on you”. Have 2017 real estate taxes been
    imposed upon we McHenry County homeowners yet?

  27. Fix the schools, the budget, the taxes.

    Drain the schools.

    No taxpayer left behind.

  28. Without Uncle Sam to help subsidize the provision of First World free services to Third World welfareites (i.e. complete parasites)by taking the sting out of local property taxes in the form of federal tax deduction, maybe the poor White taxpayers will awaken.

    Any senior living in high-property taxed McHenry county w/o income to claim the federal tax exemption is a M-O-R-O-N who deserves to be fleeced because of their stupidity in putting up with the nonsense and taxaholiocs like sweet Tina Hill, Rauner, Rahm, etc.

    If you live in Madiganistan and work for a living, your standard of living MUST decline.

    Why aren’t you asking the right demographic questions.

    PS: Llavanda will not help you, he’s part of the whole problem.

  29. The 2017 real estate taxes which are normally payable in 2017 became a lien on your property January 1, 2017. The assessments are published, some taxpayers are in the appeal process. Anyone who sold a home in 2017 gave the buyer a real estate tax credit prorated through the date of sale and is able to deduct that proration on their 2017 federal tax return.

  30. Jim Bishop is right.

    KayPassa are you Gottemoller or Norm Vinton?

    C’mon fess up

  31. According to, the Taxpayer Bill of Rights #1 is:

    “The Right to Be Informed.

    Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices and correspondence. They have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes”.

    The top management at the agency should have given we taxpayers a definitive statement and guidance about prepayment of real estate taxes. That statement would include “clear explanations” with examples.

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