When are Supplemental Property Tax Bills Deductible for Tax Filing?
So we bought our house back in 2021 and I just got around to handling this supplemental property tax bill from then. I already paid the first installment last month (December 2023). The second installment is due in April 2024, but I'm thinking about just paying it now to get it over with. My question is - if I pay the second installment now (January 2024), can I deduct BOTH installments on my 2023 taxes? Or is the deduction based strictly on when each payment was actually made? Like first installment = 2023 deduction and second installment = 2024 deduction even if I pay it early? Also, I know about the $10,000 SALT cap and with both of these payments I'll be just slightly over that limit. So trying to figure out if there's any advantage to paying early or just waiting until the due date in April.
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Kyle Wallace
Property tax deductions are based on when you actually make the payment, not when they're due or what period they cover. This is what tax professionals call the "cash basis" of accounting for individuals. Since you paid the first installment in December 2023, that amount is deductible on your 2023 tax return. If you pay the second installment in January 2024, that payment would be deductible on your 2024 tax return (the one you'll file in 2025). If you're going to hit the $10,000 SALT cap either way, there's probably no advantage to paying early. In fact, if you're already at the cap for 2023, you might want to wait and pay in 2024 so that amount counts toward your 2024 SALT cap instead.
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Malia Ponder
•Thanks for the quick response! So to be clear, even though both installments are technically for the same supplemental tax bill from 2021, I can't deduct them together on the same year's taxes unless I actually paid them both in the same calendar year?
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Kyle Wallace
•That's exactly right. What matters is when you actually make the payment, not what period the tax covers. The IRS follows the "cash basis" accounting for individual taxpayers, meaning you report income when you receive it and deductions when you pay them. So yes, even though both installments are from the same 2021 supplemental tax bill, you can only deduct each payment in the tax year when you actually made the payment. If you've already hit your $10,000 SALT cap for 2023, waiting to pay the second installment until 2024 would be advantageous since it would count toward your 2024 SALT deduction limit.
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Ryder Ross
I had a similar situation last year and found taxr.ai super helpful in figuring out my property tax deductions. I was confused because we had multiple supplemental bills from buying our home and I couldn't figure out what I could deduct when. I uploaded my property tax statements to https://taxr.ai and it analyzed them and told me exactly which payments were deductible in which tax years. Saved me from making a costly mistake claiming them in the wrong year!
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Gianni Serpent
•How exactly does that work? Do you just upload PDFs of your tax bills or what? I've got a bunch of property tax statements and honestly I'm not sure which ones I can claim for 2023 vs 2024.
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Henry Delgado
•Sounds too good to be true. How do you know their advice is actually correct? I've had tax software get things wrong before.
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Ryder Ross
•You just upload your tax documents - I uploaded PDFs of my property tax bills, mortgage statements, and a few other docs I wasn't sure about. It uses some kind of AI to read them and then explains what's deductible and when. Super straightforward. The system actually cites the specific IRS rules that apply to your situation. For my property taxes, it explained the "cash basis" rule and showed me exactly which payments counted for which tax year. It's definitely more thorough than the basic explanations I got from tax software.
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Gianni Serpent
Just wanted to follow up - I tried taxr.ai for my property tax confusion and it was incredibly helpful! I had a similar supplemental bill situation plus some special assessments I wasn't sure about. Uploaded everything and it broke down exactly which payments I could deduct for 2023 vs 2024. It even flagged that one of my payments was actually a special assessment for local improvements that isn't deductible as property tax (would have claimed it wrong). Definitely recommend if you're dealing with complicated property tax situations!
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Olivia Kay
If you're trying to figure out how to make sure you're getting all possible deductions, I'd recommend contacting the IRS directly to confirm. I was in a similar situation last year, but after spending HOURS trying to get through to the IRS phone line (seriously like 6 attempts and hours on hold), I finally discovered Claimyr. It's a service that basically gets you to the front of the IRS phone queue. I was skeptical but https://claimyr.com actually worked and got me connected to an IRS agent in about 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly how my property tax deductions should work and gave me peace of mind I was doing it right. You might want to try it if you need definitive answers straight from the IRS.
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Joshua Hellan
•Wait how is this even possible? IRS phone lines are notoriously impossible to get through. How could a third-party service possibly get you to the front of the line?
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Jibriel Kohn
•This sounds like a complete scam. There's no way some random company can magically get you ahead in the IRS queue. They probably just keep calling repeatedly on your behalf which is something you could do yourself for free.
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Olivia Kay
•It uses a system that monitors the IRS phone lines and calls repeatedly until it gets through, then it connects you when it establishes a connection. It's basically doing what you'd have to do manually but automated. It's not cutting any lines - just handling the frustrating part of repeatedly calling and waiting. You're right that technically you could do this yourself if you had hours to spend repeatedly calling, waiting on hold, getting disconnected, and starting over. I personally value my time too much for that, and it was worth it to me to get a definitive answer from the IRS without the headache.
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Jibriel Kohn
I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I had a question about my property tax deductions that I wanted the IRS to clarify. I was SHOCKED when I actually got connected to an IRS agent in about 20 minutes. The agent confirmed that for supplemental property tax bills, what matters is the payment date, not the tax year the bill is for. So for the original poster - if you pay in January 2024, that's a 2024 tax deduction, not 2023. Honestly was worth it just to have official confirmation straight from the IRS and not have to wonder if I was doing it right.
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Edison Estevez
Just an FYI for everyone - I found out that if you pay your property taxes through an escrow account with your mortgage, the deduction is claimed in the year the mortgage company actually pays the tax authority, not when they collect it from you. Made that mistake one year and had to file an amendment. Check your escrow statements carefully!
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Emily Nguyen-Smith
•What about prepayments? Can you prepay your property taxes for the next year and deduct them in the current year? I've heard conflicting things about this since the 2017 tax law changes.
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Edison Estevez
•Prepayments are a bit complicated since the Tax Cuts and Jobs Act. Generally, you can only deduct prepaid property taxes in the current year if the taxes have actually been assessed before the end of the year. If you're prepaying 2024 taxes that haven't been assessed yet, you typically can't deduct them on your 2023 return. The IRS wants to see that the tax was actually "in existence" during the year you're claiming the deduction. If your county has already determined the 2024 amount and you pay it in 2023, that might be deductible - but if they haven't officially assessed it yet, you'd need to wait to claim it in 2024.
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James Johnson
Has anybody had the situation where supplemental property tax bills arrive YEARS after you bought the property? We just got one from 2022 last month and it made me miss the SALT deduction for that year since I already filed! So annoying.
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Sophia Rodriguez
•You can file an amended return (Form 1040-X) for 2022 to claim that deduction. You generally have up to 3 years from the date you filed the original return to file an amendment. Might be worth it if the additional deduction would save you money!
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Giovanni Gallo
Great discussion here! One thing I'd add is that if you're close to the $10,000 SALT cap, it might be worth calculating whether bunching your property tax payments could be beneficial. For example, if you're going to be slightly over the cap in both 2023 and 2024, you might consider paying both installments in one year to maximize the deduction in that year, then potentially having more room for other SALT deductions (like state income taxes) in the other year. Also, make sure you're keeping good records of all payment dates and amounts. The IRS can be particular about documentation for property tax deductions, especially with supplemental bills that might not follow the typical payment schedule. I always recommend keeping copies of the cancelled checks or bank statements showing the exact payment dates, since that's what determines which tax year you can claim the deduction.
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