Anyone else prepaying property taxes so you can still deduct them this year?

[focusondisney]

Finance has always been a volatile career field. Knowing a person or two who are looking for job doesn't mean there aren't jobs. It may mean in their field it's more difficult to find one. Unemployment is currently 4.5% which is usually considered full employment. Your post is a glass half empty approach and you're only looking at a few people. How many people are in your family? 3 out of how many are looking? Every single person in my immediate and extended family is employed so if I based my view of the economy on that, I'd say there's 100% employment. See my point?

Yes, I should explain more. These are the "30 somethings" in our family, the younger generation, my kids & nieces & nephews. Three out of 10. One is a laborer, one college degree, one MBA. Different fields. Of course, I know the unemployment rate is low. I just don't think things are as rosy as some want us to believe.

 

[Mackenzie Click-Mickelson]

It was the biggest Christmas shopping season in history. Consumer confidence is soaring. I predict the bonuses will be spent.

We weren't talking about bonuses we were talking about the people would would end up getting a tax cut from the plan and thus have extra money. That's not a bonus from a company.

ETA: And I wasn't saying people wouldn't be spending money just that it matters where they spend the money in terms of economic growth in the larger sense and in the longer term versus the shorter term.

 

[Mackenzie Click-Mickelson]

I don't think any of us really can say how people will spend their money. I know two of my aunts are TA's and both say they have never been as busy as this last year. Lots of people going on trips and not budget-conscious trips but going all out. One of my aunts is going on a 12-night (or is it 15??) New Zealand cruise. She has never done anything like that before but says business has never been as good as in the last year so she has made great money.

None of us know how people will spend their extra money but I don't think most will save it. This is the budget forum and most here operate completely different than the average Joe out there. Most average Joe's are in debt up to their eyeballs and aren't really looking to change that.

Well I was going off of your comment of: "many of those people will put their extra income back into the economy". I was commenting that yeah that may happen but not necessarily in a large significant way over the long-term. All depends on how people spend their money--automatically spending money doesn't boost the economy it depends on how you're going to spend that. We could both use our personal experiences but that doesn't mean the rest of the population is using their money to go on more luxury vacations or in my experience buy a 5th wheel and a new truck, etc. And long-term growth is what I was discussing.

 

[cruiser21]

We weren't talking about bonuses we were talking about the people would would end up getting a tax cut from the plan and thus have extra money. That's not a bonus from a company.

ETA: And I wasn't saying people wouldn't be spending money just that it matters where they spend the money in terms of economic growth in the larger sense and in the longer term versus the shorter term.

Sorry my bad. I usually owe an additional 3k every April. I'm looking forward to not owing. If I got a refund I'd spend it in a heartbeat. Does it matter what people do with the money it's their money not the governments. I believe cutting taxes always stimulates the economy. How could it not?

 

[Mackenzie Click-Mickelson]

Sorry my bad. I usually owe an additional 3k every April. I'm looking forward to not owing. If I got a refund I'd spend it in a heartbeat. Does it matter what people do with the money it's their money not the governments. I believe cutting taxes always stimulates the economy. How could it not?

lol see KS for when it doesn't. Mind you that was a slightly different thing but still the thought was lower taxes would equal growth. Also not delving into the political so that's the most I would say on that.

 

[Mackenzie Click-Mickelson]

On the topic of the thread the local news ran a story about people pre-paying in my area. Seems like enough people are trying to take advantage here. Hopefully it works out for them.

Like others have mentioned ours are due in 2 payments-one in December and another due the following April/May.

The local news did say though that people should look into if it makes sense to prepay rather than jumping to the conclusion that it will.

 

[bdcp]

On the topic of the thread the local news ran a story about people pre-paying in my area. Seems like enough people are trying to take advantage here. Hopefully it works out for them.

Like others have mentioned ours are due in 2 payments-one in December and another due the following April/May.

The local news did say though that people should look into if it makes sense to prepay rather than jumping to the conclusion that it will.

There's a lot of knee-jerk reactions on here. I also see a lot of people not believing any good news is possible. I think a lot of people rushing to pre-pay are going to be pleasantly surprised when they see the tax break in their pay and later do their 2018 taxes.

 

[Colleen27]

I believe cutting taxes always stimulates the economy. How could it not?

A number of ways.

If cutting taxes doesn't significantly increase consumer spending, which is what many economists are predicting will happen this time, there's no bump in demand to justify more hiring. It is supply-and-demand 101 - without consumer demand, there is no reason to increase production/supply.

If enacting what is essentially an economic stimulus during a period of full employment and consistent growth prompts interest rate hikes, the benefit to many low and moderate income consumers will be erased by the higher cost of consumer debt.

If the tax cuts are offset by cuts to benefits with a high multiplier rate, like food stamps or social security which are spent almost immediately and in full by most recipients, the loss of that spending can outweigh the gains created by consumers with slightly more in their paychecks.

Tax cuts don't create upward pressure on wages, and unless they're targeted toward the specific demographics that will see the least benefit from this (low-income households, particularly those with children, cash-strapped middle class parents of teens and college students) they don't provide a sustained boost in consumer demand. Plenty of CEOs have outright said that the benefit from this cut will go into stock buybacks and higher dividends, both of which have a low multiplier effect in the bigger economy, and it does appear that there is significant support in Congress for cutting high-multiplier safety net programs to offset the cost of the bill.

 

[deide71]

We're in a similar boat with the impact of the plan but since there's no way we'll be itemizing, we can't really do anything about it. Losing the personal exemption really hurts us. We'll go from 33,750 in standard deduction/personal exemptions to the new 24,000 standard deduction, and since only one of the kids is young enough to qualify for the expanded child tax credit, that isn't enough to offset the sudden increase in our taxable income. The calculators I've seen have been all over the place, from a $400 increase to a $1500 cut, but my own back-of-the-napkin math doesn't look promising. I suppose only time will tell but either way I don't see the extra few bucks as worth the safety net trade-offs that will be demanded next year to pay for it.

Sounds like we are in a similar financial situation. The loss of the personal exemption is a bigger loss for us than the limits to SALT.

Most of those online calculators are bogus and I really think peop!e that itemized before are going to be in for a surprise on what the tax bill will truly be saving them next year, especially if they have kids that will be too old for the child tax credit but would have still qualified as an exemption under the current plan.

 

[disneymagicgirl]

Everything seems great. But I had 3 family members lose their jobs in the last 18 months. One (who is in finance!) was unemployed for 13 months, finally got a job. The other 2 are still looking, 1 for 6 months & 1 for 18 months. So I guess, I'd say, people are looking for jobs!

Yes, I should explain more. These are the "30 somethings" in our family, the younger generation, my kids & nieces & nephews. Three out of 10. One is a laborer, one college degree, one MBA. Different fields. Of course, I know the unemployment rate is low. I just don't think things are as rosy as some want us to believe.

Have they considered moving or are they determined to stay where they are...that makes a big difference. I'd love to move back to Charleston with my family, but my husband makes 3x as much money in Nashville. We follow the money.

 

[Dakota731]

If cutting taxes doesn't significantly increase consumer spending, which is what manyeconomists are predicting will happen this time,

A lot of “experts” have been wrong in the past year or so I don’t hold a lot of faith in all their opinions. With the surging stock markets, better than ever holiday season and low unemployment numbers, I’m excited about the upcoming tax cuts for the future of our country. All the gloom and doom before they’ve even started seems a little premature and those who wish for failure may have other agendas! We are going to do some remodeling and are very happy to share our tax cut and put money back into the economy!

 

[bdcp]

Have they considered moving or are they determined to stay where they are...that makes a big difference. I'd love to move back to Charleston with my family, but my husband makes 3x as much money in Nashville. We follow the money.

This! Too many people think they have to stay where they are. Moving for jobs is something everyone should be willing to consider. It's about taking care of your family. One of the reasons we moved where we are (all family is within 4 hours and some are closer) was due to DH's job. He couldn't make what he makes in most places, but if the only job he could find was 1,000 miles away, we would move. It's what's best for our family.

 

[bdcp]

And some will come out the same. There must be a lot of upper income disboarders with all the complaining on this site! And no matter how you try to spin it, if you’re making over $200k with a $750k house You Are Not middle class! I don’t care where you live - if you say “but we live in Beverly Hills”. Well if you live in a rich suburb then you are not middle class! Though I wonder if these tax cuts were given four years ago, would there be quite a different reaction?

Where we live, that is middle class. Median household income in our county is $125,000 and the average age here is pretty young. We fit the numbers you said above and then some (two incomes plus navy reserve retirement pay), but I am 57 and DH is 60, we're at our peak earning time, and our kids are grown, and we have spent years getting to this point. We live in the wealthiest county in the US (it's always #1 or 2) but the cost of living is very high. That's what people don't get. If you make $100,000 per year but live somewhere that homes are $200,000 you already have a higher percentage of disposable income than we do. Our home cost us 5x what we were making when we bought it. It's currently worth 3x what we make now. Are we fortunate? Yes, but it didn't just happen. We also spent years when I was a SAHM just making ends meet because of the high cost of living in the DC area. What's funny is we are doing well, but we have neighbors who make more than we do. All it takes is two GS-14/15 (Fed gov) to hit $300,000 household incomes which I know quite a few who do. These are people with advanced degrees and/or technical degrees and backgrounds. Our house is large, but we have communities all over the county with larger ones.

There's a lot more to look at than just the numbers you stated above. You can't just make the statement you did because you "think" that's not middle class. While the national average is well below that, it fits our location.

 

[TwoMisfits]

Where we live, that is middle class. Median household income in our county is $125,000 and the average age here is pretty young. We fit the numbers you said above and then some (two incomes plus navy reserve retirement pay), but I am 57 and DH is 60, we're at our peak earning time, and our kids are grown, and we have spent years getting to this point. We live in the wealthiest county in the US (it's always #1 or 2) but the cost of living is very high. That's what people don't get. If you make $100,000 per year but live somewhere that homes are $200,000 you already have a higher percentage of disposable income than we do. Our home cost us 5x what we were making when we bought it. It's currently worth 3x what we make now. Are we fortunate? Yes, but it didn't just happen. We also spent years when I was a SAHM just making ends meet because of the high cost of living in the DC area. What's funny is we are doing well, but we have neighbors who make more than we do. All it takes is two GS-14/15 (Fed gov) to hit $300,000 household incomes which I know quite a few who do. These are people with advanced degrees and/or technical degrees and backgrounds. Our house is large, but we have communities all over the county with larger ones.

There's a lot more to look at than just the numbers you stated above. You can't just make the statement you did because you "think" that's not middle class. While the national average is well below that, it fits our location.

If it's Fairfax County (where I have family), that county has a definite dividing line for housing that is middle and below vs middle and above. If you are middle and below, you rent or live in attached housing (which sells for 1/2 the price of detached housing - many of these attached homes can fit families of 6 or less b/c they were designed to meet the middle's needs)...if you are upper middle and above, you can afford a detached house...so, with a detached house, you are probably in the top 1/3 of the area (with 1/3 renting/getting subsidized, 1/3 in attached housing, and 1/3 in detached housing)...that's not "upper" class, but that's definitely closer to upper than to the dead middle...

Median Sales Price of New and Existing Homes (March 2017)
Type Price
Detached Homes $744,526
Attached Homes $379,320
Source: Fairfax County Department of Management and Budget, Economic Indicatiors

 

[cruiser21]

And some will come out the same. There must be a lot of upper income disboarders with all the complaining on this site! And no matter how you try to spin it, if you’re making over $200k with a $750k house You Are Not middle class! I don’t care where you live - if you say “but we live in Beverly Hills”. Well if you live in a rich suburb then you are not middle class! Though I wonder if these tax cuts were given four years ago, would there be quite a different reaction?

LOL you are on board where people take 10k disney vacations and pay 20k for disney cruises. I would assume the income level of posters on this board is above average. Upper middle class is 100k to 350k. I think if you make 200k with a 750k house you've taken on too big a mortgage for you income...... maybe that's why they feel middle class. No disposable income.

 

[Mackenzie Click-Mickelson]

A lot of “experts” have been wrong in the past year or so I don’t hold a lot of faith in all their opinions. With the surging stock markets, better than ever holiday season and low unemployment numbers, I’m excited about the upcoming tax cuts for the future of our country. All the gloom and doom before they’ve even started seems a little premature and those who wish for failure may have other agendas! We are going to do some remodeling and are very happy to share our tax cut and put money back into the economy!

Unemployment rate by itself doesn't equate to a strong economy. It does mean more people jobs but having a job doesn't mean you have enough money to significantly help the economy--having money leftover after paying for necessities would be more favourable than someone who only has enough money due to their job for housing, food and some clothing.

My state has/had a low unemployment rate and the cutting of taxes, the removal of the llc/small business tax, etc created what was once a very healthy economy to the worst in the nation as far a growth. We rejoiced when it was finally vetoed in our favor (which took multiple times) and our income tax was raised--when's the last time you heard someone begging to have their income tax percentage raised?

I'm not sure I would call it gloom and doom for most people but I would say it's a cautious outlook. I don't mind paying more even when it was $1,000 more, that still would have sucked but I'm not whining about it (I have more beef that I can only deduct 2,500 in student loan interest if filing jointly but that's been the case for years) but I'm not fully convinced it will provide long term growth and I'm not rooting for short term I'm wanting long term.

But I am geniuinely curious what you consider rich suburb?

 

[emilymad]

This! Too many people think they have to stay where they are. Moving for jobs is something everyone should be willing to consider. It's about taking care of your family. One of the reasons we moved where we are (all family is within 4 hours and some are closer) was due to DH's job. He couldn't make what he makes in most places, but if the only job he could find was 1,000 miles away, we would move. It's what's best for our family.

While this is very true it is sometimes hard to get jobs when you are out of state. DH tried to find a job in any location when he was out of work but a lot of companies wouldn't talk to him since he wasn't local. He ended up getting lucky and getting a job where we live but we were 100% open to moving. We had been planning on paying for relocation, etc ourselves so we weren't being unrealistic.

 

[cruiser21]

Unemployment rate by itself doesn't equate to a strong economy. It does mean more people jobs but having a job doesn't mean you have enough money to significantly help the economy--having money leftover after paying for necessities would be more favourable than someone who only has enough money due to their job for housing, food and some clothing.

My state has/had a low unemployment rate and the cutting of taxes, the removal of the llc/small business tax, etc created what was once a very healthy economy to the worst in the nation as far a growth. We rejoiced when it was finally vetoed in our favor (which took multiple times) and our income tax was raised--when's the last time you heard someone begging to have their income tax percentage raised?

I'm not sure I would call it gloom and doom for most people but I would say it's a cautious outlook. I don't mind paying more even when it was $1,000 more, that still would have sucked but I'm not whining about it (I have more beef that I can only deduct 2,500 in student loan interest if filing jointly but that's been the case for years) but I'm not fully convinced it will provide long term growth and I'm not rooting for short term I'm wanting long term.

But I am geniuinely curious what you consider rich suburb?

Having a job may not mean your making enough to stimulate the economy, but it means your not living on welfare...which in my opinion helps the economy.

 

[Mackenzie Click-Mickelson]

Having a job may not mean your making enough to stimulate the economy, but it means your not living on welfare...which in my opinion helps the economy.

I agree in that you are not being dependent on social resources but as far as growth in the long term if you aren't getting paid well enough to splurge on this or that or to take that vacation,etc you're not necessarily helping in a significant way. If you get a job and aren't calculated in the unemployment rate but your job doesn't allow for much or any disposable income you're not guaranteed to be helping the economy. My point was just by virtue of a low unemployment rate doesn't equate to a strong economy.

My state having a low unemployment rate may have looked good on paper but because of the other things we were bleeding money and our economic growth was the slowest in the nation.

 

[MomToOne]

And some will come out the same. There must be a lot of upper income disboarders with all the complaining on this site! And no matter how you try to spin it, if you’re making over $200k with a $750k house You Are Not middle class! I don’t care where you live - if you say “but we live in Beverly Hills”. Well if you live in a rich suburb then you are not middle class!

10 years ago, I lived in what was considered an AWFUL neighborhood in a less-desirable city in Silicon Valley. I sold my old, 1200 sq foot 2 bedroom home with no air conditioning or central heat (just a wall heater) for $500K then, today it is worth over $750K. Older build, non-luxury 3/4 bedroom houses on tiny lots in decent - not great - neighborhoods go for 1.5 million. It is not just "rich suburbs" that can have ridiculous housing prices - this is true for the entire area. Short of living 2+ hours from your job, that's what you face (and even going that far only gets you housing that is 2/3's the cost). Companies compensate for the high cost of housing by giving higher salaries - but that doesn't mean you have a higher standard of living than what people making less in other areas have.

The fact is that salary, housing prices and taxes are a complicated triangle that over time find an equilibrium in any area. Now this tax plan has thrown that out of balance for some areas, and it will take years for it all to get back in balance. Yes, people made the decision to live in these areas. But those decisions were based on what was the federal tax structure and rules at the time, which had been consistent for a very long time. Those rules have now changed, very quickly and without enough warning for people to make big life changes like finding new jobs and moving. So it is hard for people in these high housing cost/high local tax areas to stomach the changes.