UPDATE: As of 12/27/17 - The below article is now outdated for much of RVA. Please check out our post with IRS update.
Here’s how the new tax bill plays out locally in Richmond, Henrico, Chesterfield, and Hanover.
As widely discussed, the final form of the tax bill passed in Congress caps total deductions for state and local taxes at $10,000 beginning in 2018. For many of our clients who earn more than six figures, this change will be detrimental because their cumulative state income and local property taxes exceeds the cap. The clock is ticking and there are just a few days left to decide whether or not to prepay, in 2017, those taxes owed for 2018. While Congress specifically prohibited prepaying state income taxes for 2018 and taking the deduction on your 2017 federal income tax return, it did not prohibit prepaying local property taxes. Are you interested? Here's how you can take advantage of a full federal deduction for your local property taxes for one final year (until Congress changes the tax code yet again):
Locally, Henrico County, Chesterfield County, Hanover County, and the City of Richmond all allow prepayment of property taxes. All four localities require that you clearly indicate that your check is for prepayment of the 2018 taxes. Chesterfield and Hanover County request that residents notate "prepayment for 2018" and their account number in the memo line of the check. The City of Richmond requires a "bill number," which is an invoice number. If you do not have a bill number (and you would not, for the second half of 2018), you can call the Finance Department and provide your tax parcel ID number or address and they will generate a bill and provide the number to you. You can find your tax parcel number online through your locality’s website.
Last, if your property is mortgaged, you may want to pay in person so you can get a receipt from your locality showing the 2018 taxes were paid. You can use that receipt to prove to your lender that your monthly escrow for property taxes can be adjusted. Depending upon whether taxes are paid in advance or arrears, your lender may have already escrowed part of the payment for 2018 - so the next time they conduct an escrow assessment, you may stand to receive a refund. For specifics, contact your lender to see how it will handle this issue and to determine when you might expect a refund.