Orange County property owners are rushing to pay their 2018 property tax bill before this year ends to save an income-tax benefit that could be trimmed by recent legislation.
Orange County Treasurer Shari Freidenrich reports that as of Thursday, Dec. 28, her office collected second installment payments for the 2017-2018 billing cycle, due April 10, from 206,791 taxpayers. A year ago at this date, 165,583 had paid — a jump of roughly one-quarter.
Higher-income taxpayers could lose some federal income tax deductibility for state and local taxes paid beginning next year. Thus, property owners are making payments in 2017 to beat a new $10,000 cap on state and local tax payments beginning in 2018.
That’s probably why the early second-installment payments to Orange County rose this year to $636 million paid vs. $403 million last year at this time — a jump of 58 percent.
The last-minute rush means the county has already collected 19.7 percent of second installment payments due vs. 13.3 percent a year ago.
And another example of the payment rush: The tax collector’s office handled more than 1,000 telephone calls a day this week, the kind of volume usually seen on Dec. 10, the first installment’s due date. Normally, the office would handle 200 calls a day at this time of year.
So who’d likely be considering this kind of pre-payment?
First, your household has $100,000-plus in income. Roughly 90 percent of the deduction for “SALT” — state and local taxes — go to people above that income threshold.
Next, you’d have to consider how much you’re paying in state income taxes. Then how big is your property tax bill? There’s no limit on these deductible payments today, but anything above $10,000 won’t be deductible beginning next year. Property owners paying more than the new limit should consider an early move.
California property taxes are complex, thanks to Proposition 13’s benefits for long-standing owners. So, typically the biggest tax bills are for buyers in recent years, especially new owners in communities with pricier housing. Highest tax valuations in Orange County — which can differ greatly from actual value — are found in Laguna Beach, Irvine, Villa Park, Seal Beach and Newport Beach.
The average secured property tax bill is approximately $7,100, according to Freidenrich. In a press statement she said “it is likely that many taxpayers” are impacted by this tax change.
Her office’s statistics show that compared to last year there have been 41,208 extra payments on the second installment worth $234 million. That averages out to $5,667 per additional taxpayer who’s prepaying the second half of what’s due.
Freidenrich notes the county is collecting early payments for the 2017-18 tax year for secured and supplemental property taxes for taxes already billed. She added taxpayers can pay online up to midnight Dec. 31 by electronic check from their bank account (using credit or debit cards means a service fee) and get a detailed receipt with a stamped time of payment.
The county will not accept any prepayments for property taxes for its 2018-19 tax year as the IRS has ruled such payments won’t be eligible for deductions under 2017’s more generous federal tax rules.
Orange County Register PUBLISHED: December 29, 2017 at 2:31 pm For more information, go to ttc.ocgov.com