Benefit to paying property taxes in 1 installment?

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Benefit to paying property taxes in 1 installment?

Post by mediahound » Sat Oct 09, 2010 9:44 am

My county does property taxes in 2 payments (with no fees), one Due November 1st, and one due February 1st.

I understand if I pay both now I can get the entire tax write off this year.

Is there any benefit to paying the full amount all at once over paying the installments? It seems it would all balance out over the years anyway.

Am I correct?

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Post by livesoft » Sat Oct 09, 2010 9:52 am

You may benefit from bunching your deductions in alternate years.

Or you may avoid AMT by splitting your property tax into 2 years.

Or there may be no benefit whatsoever.

It will all depend on your income(s) for the year(s) in question. At least you have been given the flexibility to do what might be best for you.

You can pay the first payment, then you can decide the last week of December whether to pay the Feb 1 payment in 2010 or 2011.

Even in counties with one due date, one may be able to pay taxes in installments. For example, our penalty-free due date is Feb 2011 though we get the bill this month. We can pay any amount at any time as long as all is paid by Feb 2011. I have split paying into separate years in order to avoid AMT.

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Post by sscritic » Sat Oct 09, 2010 9:53 am

It depends on other factors. Sometimes you benefit by bunching income into a particular year so that your income is lower in another to avoid tax on social security, phase-outs, etc.

Suppose that your itemized deductions were just below the standard deduction. If you bunch deductions into one year, you get to itemize. The next year, your deductions will be far below the standard deduction, so you take the standard deduction. By bunching, you save on your taxes.

Added P.S.: I worry about having my social security taxed; livesoft worries about his AMT. That about sums up the difference in our lives. :)
Last edited by sscritic on Sat Oct 09, 2010 9:59 am, edited 1 time in total.

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Post by mediahound » Sat Oct 09, 2010 9:56 am

I forgot to mention, I bought the home this year (in May) so this is my first year of paying property taxes (not sure if that makes a difference).

On a personal financial standpoint, it would be better for me to use the installment plan because I don't really have the full lump sum without digging into my savings currently. But I would do that if it were to benefit me. I suspect that it may be of benefit this year since I purchased the property this year? I could then get more of a write off for this year?

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Post by The Wizard » Sat Oct 09, 2010 10:02 am

Just focus on paying those property taxes by their due date for now then.
Use your creative financial energy in other productive ways for now, such as plotting how to become debt-free...

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Post by mediahound » Sun Oct 17, 2010 2:20 pm

Another question-

It says Due Nov. 1 but not delinquent until Dec. 10th.

Is there any benefit to paying it by Nov. 1st? I don't get why I should give them the money sooner rather than later?

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Post by tdhg566 » Sun Oct 17, 2010 2:47 pm

mediahound wrote:... I don't get why I should give them the money sooner rather than later?
If you wait until Dec 10th and on the way to the post office or county courthouse you have a traffic accident, you may miss the payment and incur a penalty.

If you wait until Dec 9th and have a serious traffic accident and forget your name or where you live, you may miss the payment and incur a penalty.

Of course, if the accident is serious enough, or if you're killed, the penalty might be the least of your concerns. But the penalty could be a concern for your wife or loved ones

I'm sure you see where this is going...
As an Enrolled Agent I advise clients about taxes and investments. My work is retiree friendly, geographically portable, mentally stimulating, personally profitable and emotionally rewarding.

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Post by DonnaB » Sun Oct 17, 2010 2:48 pm

since you didn't provide any details, please verify that your interest and taxes and other Sched A items for a partial year will be enough to itemize. If not, save them for next year!

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Post by Shireman28 » Mon Oct 18, 2010 11:09 am

I pay them at the same time so I don't lose/forget about the Feb. slip and wake up one day to a sheriff's sale on my lawn.

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Post by Yipee-Ki-O » Mon Oct 18, 2010 1:04 pm

I also chose to pay my property taxes for the year at one time rather than in four installments. Instead of quarterly they were at odd times over the course of the year so the psychic reward of not having to remember the due dates far exceeded any interest I might have earned.

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Post by Ron » Mon Oct 18, 2010 1:09 pm

I get a 2% discount if I pay early - so I pay early.

I can't get that much in interest if I "invest" the money in a short term, guaranteed product. I know folks think that this is an option they should take, but in reality how many do?

At my age (and debt free), taxes don't matter as deductions anymore (thank goodness :lol: ).

The taxes come in the mail one day - the check goes out the next...

- Ron

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