Homeowners rush to prepay property taxes before federal deduction is capped

DENVER -- Thousands of people across the country are racing to prepay their property taxes before 2018, when state and local tax deductions will be capped at $10,000 under the new tax plan signed by President Donald Trump last week.

The new cap, which applies to any combination of property, income and sales taxes, could translate into a tax hike of hundreds or even thousands of dollars in mostly wealthier, high-tax communities.

In Boulder and Douglas counties, where median home values are especially high, hundreds have waited in line the past few days to prepay their 2018 taxes.

It's the same in other high-tax areas across the country. The cap is affecting people who write off their property taxes or don't itemize their deductions.

But the prepayments might not be tax deductible.

The IRS said Wednesday that some homeowners who pay real estate taxes early will be able to claim the deduction, but only if the taxes were assessed, billed and paid in 2017.

The IRS said people can't guess at what next year's assessment might be, pay that amount ahead of time and still get the deduction.

"A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017," the IRS said on its website.

That distinction wasn't always clear to people flooding into local taxes offices after Christmas, or to the officials trying to help them. But most thought it was worth a try.

Treasurers' offices in Colorado have reported a heavy increase in foot traffic for this time of year.