MooreBonds
Thinks s/he gets paid by the post
Granted, this may sound like a stupid idea, but just assume that it's worth it to the person paying the real estate taxes...
If someone itemizes their income tax return, and normally deducts their real estate taxes on Sch A, what is the IRS ruling on prepaying MULTIPLE future years (i.e. not just 2007/2008 taxes in Dec 2007, but also prepaying 2009 and possibly 2010 taxes as well)?
The only references I can find in Publication 17 (http://www.irs.gov/publications/p17/ch22.html) are as follows:
"The following two tests must be met for any tax to be deductible by you.
-The tax must be imposed on you.
-You must pay the tax during your tax year.
The tax must be imposed on you. Generally, you can deduct only taxes that are imposed on you."
Based on the above, I presume that the definition of "imposed on you" means that you have received a bill for the tax?
But, later on....
"Refund (or rebate). If you receive a refund or rebate in 2006 of real estate taxes you paid in 2006, you must reduce your deduction by the amount refunded to you. If you receive a refund or rebate in 2006 of real estate taxes you deducted in an earlier year, you generally must include the refund or rebate in income in the year you receive it. However, you only need to include the amount of the deduction that reduced your tax in the earlier year. For more information, see Recoveries in chapter 12."
From the above part on "refunds", it references if you receive a refund for taxes "deducted in an earlier year". Could this loosely refer to prepaying more than 1 year in advance, or is this referring to gov't bureaucracy taking 2-3 years to finally getting around to reappraising your house and reducing your real estate taxes that you paid several years ago?
I realize that it's a slim chance that you can deduct real estate taxes that you haven't been billed yet...but there are large income taxes involved for 2007, and a need for as many 'extra-ordinary' deductions as possible for 2007.
--Peter
If someone itemizes their income tax return, and normally deducts their real estate taxes on Sch A, what is the IRS ruling on prepaying MULTIPLE future years (i.e. not just 2007/2008 taxes in Dec 2007, but also prepaying 2009 and possibly 2010 taxes as well)?
The only references I can find in Publication 17 (http://www.irs.gov/publications/p17/ch22.html) are as follows:
"The following two tests must be met for any tax to be deductible by you.
-The tax must be imposed on you.
-You must pay the tax during your tax year.
The tax must be imposed on you. Generally, you can deduct only taxes that are imposed on you."
Based on the above, I presume that the definition of "imposed on you" means that you have received a bill for the tax?
But, later on....
"Refund (or rebate). If you receive a refund or rebate in 2006 of real estate taxes you paid in 2006, you must reduce your deduction by the amount refunded to you. If you receive a refund or rebate in 2006 of real estate taxes you deducted in an earlier year, you generally must include the refund or rebate in income in the year you receive it. However, you only need to include the amount of the deduction that reduced your tax in the earlier year. For more information, see Recoveries in chapter 12."
From the above part on "refunds", it references if you receive a refund for taxes "deducted in an earlier year". Could this loosely refer to prepaying more than 1 year in advance, or is this referring to gov't bureaucracy taking 2-3 years to finally getting around to reappraising your house and reducing your real estate taxes that you paid several years ago?
I realize that it's a slim chance that you can deduct real estate taxes that you haven't been billed yet...but there are large income taxes involved for 2007, and a need for as many 'extra-ordinary' deductions as possible for 2007.
--Peter