IRS: Texans cannot deduct more than $10K for property even if they prepay

People at the Travis County Tax Office in Austin. (KXAN Photo/Phil Prazan)
People at the Travis County Tax Office in Austin. (KXAN Photo/Phil Prazan)

AUSTIN (KXAN) — Texans cannot deduct more than $10,000 for their 2018 property taxes — even if they pre-pay. The IRS clarified the rules for tax professionals and taxpayers after President Donald Trump signed a new tax bill a week ago that eliminated popular deductions. 

The new tax reform law only allows people to deduct state income and local property taxes up to $10,000 — and paying them sooner doesn’t mean they can get a higher deduction.

“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 2018-1019 tax year until July 1st, 2018,” wrote IRS staff.

Before this, many Texans were confused, and bombarded the Travis County Tax Office the last week of December to register their cars, register to vote and pay and pre-pay taxes. This year, temporary workers were hired for the mail room. What’s usually a steady stream is a flood this year.

“It’s like night and day. This is a lot more busy with foot traffic — a lot more busy with phone calls,” said Brooke Houghton, a tax specialist at the county tax office. “Most of it is questioning, just making sure that they have all the information on their taxes that they need.”

Texans who pay less than $10,000 in property taxes will not see any change.

In Travis County, there are 67,500 properties that pay more than $10,000 in property taxes — 40,800 of those are homes.

“They’ll be able to deduct the first $10,000, but after that they won’t. That’s unfortunate because for years and years Texas taxpayers have looked forward to at least being able to deduct their property taxes,” said Travis County Tax Collector Bruce Elfant. “The 2018 taxes haven’t been assessed yet. They don’t exist. So there’s no way under the IRS rules that Texans will be able to take advantage of that deduction.”

Those who have already pre-paid for 2018 can call the tax office for a refund application.

By noon Wednesday, the Travis County tax office received five hundred calls about tax deductions. The in-person wait can often be more than an hour. The assessor says it’s much quicker online.

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