What to know about prepaying your property taxes in Travis County

This northwest Austin neighborhood is using Nextdoor.com. (Kevin Schwaller)
FILE - Northwest Austin neighborhood (KXAN File Photo)

AUSTIN (KXAN) — While December is always a busy period for the Travis County Tax Office, this week has been busier than ever. Clerks have been fielding customer visits, phone calls and emails seeking clarification on the new property tax deductions and how they can prepay for 2018.

Tiffany Seward, a spokesperson for the Travis County Tax Office, says by noon Wednesday the office had received 500 calls about property taxes and many of those calls were about tax deductions. On Wednesday afternoon, the Internal Revenue Service sent out guidance regarding the deductions and with that new information, Seward says it appears those prepayments won’t be deductible for Texas homeowners.

Here are the other things you’ll need to know if you want to prepay in Travis County.

Your current Travis County tax bill is for 2017

The bill that you received in October was for the 2017 tax year and assessed rate. Tax bills are technically due upon receipt but they don’t become delinquent until Feb. 1, 2018.

Many people pay their bill in 2017 to deduct them from the income tax.

Can you prepay your taxes for 2018? 

Seward says they accept prepayments for 2018, but those payments go into escrow and aren’t applied until October 2018, when the new tax bill is calculated.

That money is then moved from escrow to pay for your taxes. If you overpay, the county will issue a refund that could take a few months.

Will the prepayments be deductible?

Seward says the IRS’ new guidelines indicate that those taxes are not going to be deductible in Texas. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017

If a county assesses 2018 taxes in 2017 and you pay them, then you can deduct them. In Texas, however, that’s not how property appraisals are done. They aren’t assessed until 2018.

With the new information indicating people won’t be able to deduct prepayments, Seward says people who really want to prepay can still do so, but she says they’re hoping to slow down the prepayments, “simply because we want to be able to process all of the other payments — our normal workload — and reduce the number of refunds that we’ll have to produce as a result.”

How many homeowners in Travis County pay more than $10,000 in property taxes?

The number of residential real estate with property taxes of $10,000 or more is 67,598 in Travis County — 40,798 of which have homesteads, which are owner-occupied properties.

That’s out of 430,000 parcels in the county, so the people who pay more than $10,000 or more in property is a small percentage.

As of Dec. 28, 39 percent of property taxes in Travis County have been paid.

IRS Examples

Example 1: Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018. On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018. Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.

Example 2: County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019. However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year. 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 tax year until July 1, 2018.

Editor’s Note: A previous version of this story indicated property taxes are delinquent on Feb. 21 but it’s Feb. 1, 2018

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