Rush is on to prepay property taxes
Dozens of people waited in line for more than an hour Thursday at Honolulu Hale trying to beat an end-of-the-year deadline to save money by paying their 2017 property taxes early.
Mahalo for reading the Honolulu Star-Advertiser!
You're reading a premium story. Read the full story with our Print & Digital Subscription.
Already a subscriber? Log in now to continue reading this story.
Dozens of people waited in line for more than an hour Thursday at Honolulu Hale trying to beat an end-of-the-year deadline to save money by paying their 2017 property taxes early. But how much money they’ll save — if any — remained unclear.
Former Mayor and city Prosecutor Peter Carlisle showed up at the end of the line at lunchtime Thursday prepared to pay the city and county $1,603.70 — the second installment on his 2017 Hawaii Kai property tax bill that’s not due until February.
Like dozens of other property owners Thursday, Carlisle hoped to take advantage of a one-time opportunity to deduct his 2017 Honolulu property taxes on his 2017 income tax returns after President Donald Trump signed a Republican tax overhaul plan that sets a limit of $10,000 for state and local taxes that taxpayers can deduct.
Carlisle believes that paying the second installment early on his 2017 property taxes could save him as much as $1,000. But he wasn’t sure standing in line with other concerned but confused taxpayers was worth it.
“It’s a useful thing to do,” Carlisle said. “But I’m looking at the line and I’m about to abandon ship.”
The Internal Revenue Service on Thursday advised tax professionals and taxpayers that “pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.”
The IRS said if you were billed for the property tax in 2017 and paid it in 2017, you should be allowed to deduct it even if you didn’t have to pay the second property tax installment until February.
“In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018,” the IRS said.
Worth standing in line?
Tod Marcus, a tax preparer and the owner of Tax Services Oahu, said there’s plenty of confusion over who will benefit by prepaying their February tax bill by today.
“The phone’s ringing off the hook,” Marcus said. “People want to know whether they’re going to save money or not. I’m telling them that if they can prepay any … property tax by the end of the year, it may help them. It may present a savings, although the savings will be small to moderate.”
For “most people,” Marcus thinks prepaying their February tax bill will amount to savings of $100 or $200.
“It might not even help at all,” Marcus said. “The average middle-class family might only save $200 or $300, but some people who pay a lot in property taxes could save as much as $1,000 if they get in by (today). But a lot of people don’t have that money lying around, and it might not even be deductible … for some people.”
Michael Nagasaki of Manoa was uncertain how much money he’ll save by paying off the $1,420.82 remaining on his property taxes in 2017 instead of waiting until the February deadline.
But with a home worth more than $1 million, Nagasaki is banking that he’ll save something on his 2017 income tax return by paying off his property bill early.
Exactly how much will he save?
“I have an accountant to do that,” Nagasaki said.
Peter Pinkerton of Kakaako was ready Thursday to pay the city and county $1,686.30 that’s not due until February.
But to do so, Pinkerton had to stand in line only to be told that he needed a form showing the amount that’s due in February. After he got his new form, Pinkerton then had to stand in the original line again.
As he waited in his third line of the day, Pinkerton hoped the effort would pay off.
“I’m trying to save money,” Pinkerton said. Asked how much he expects to save, Pinkerton said, “I don’t know what it’s going to be.”
But, Pinkerton said, if waiting in line ends up saving him “$500 or $600, it’s worth it.”