Paying taxes early isn’t something most people rush to do.
But that’s what’s happening around the country right now because of a change next year in the tax code.
There’s a cap coming next year to how much of your property taxes you can deduct from your federal tax bill.
This year, there is no limit on deductions.
So across the nation and in Hawaii people are paying up early hoping to take advantage of the current tax code before the new one take effect.
What does this all mean for local residents?
An accountant tells KHON2 that paying off next year’s taxes now could help save some folks a lot of money.
Honolulu Hale was full of homeowners paying off their property taxes before the start of the new year.
“A group of surf friends, we been talking about it every morning while surfing, and we all decided might as well take advantage of it,” Jeff Wandall said.
There was some confusion with the process.
“So stupid! You know, I was the second person in line to get it taken care of. The girl comes out and says, ‘oh, you know you need a certain paper.’ So here I am and she says, ‘oh, the paper you have is no good. You have to go back and stand in that line, which is just as long as this line!” Manoa resident Michael Nagasaki said.
Nagasaki says it’s worth it though to save money.
“The more you know about this, the more you’re going to save,” CPA Reg Baker said.
Baker says if you wait until 2018 to pay off your property taxes, you may be subject to the new $10,000 cap on state taxes because of the new federal tax bill. That means if you pay more than $10,000 in property taxes, you can only deduct $10,000 on your tax return.
“For people who have their coupons, if you ever seen it, there’s a statement that comes out with assessment. Each must be paid separately. The two for 2018? Pay it now, save that money,” baker explained
The City Council sets the tax rates. Currently it’s $3.50 per $1,000 of your home’s assessed value.
“Let’s just say its gonna be 5,000 dollars. And if you’re in the 25 percent tax bracket, and you get to reduce income 5,000 dollars, you saved yourself 1,250 dollars by paying it this year,” Baker said.
The city says it’s seen a lot of homeowners come in to pay their property taxes this week.
If this is something you’re considering, the best thing to do is check with your accountant to see if it makes financial sense.