President Donald Trump signed the new GOP tax bill into law, before heading to Mar-a-Lago for Christmas.
You're probably trying to figure out what the new tax plan means for you, especially if you own a home. Changes made to state and local deductions are expected to have the biggest impact on blue states and people with extremely high property taxes.
Some homeowners in states like California are now trying to pre-pay their property taxes, according to the San Francisco Chronicle.
That's not something you can do in Washington state, according to King County Assessor John Wilson who says he's already fielding that very question.
“We're already getting people, particularly folks who are saying can I pre-pay my property tax?” said Wilson. “Well, unfortunately, no, by state law, we can't accept a payment until we set the tax roll that won't be until mid-January. People are caught, even if they wanted to do something pro-actively."
As a result of the new tax bill, the state and local tax deduction has been capped at $10,000. The typical property tax bill in King County last year was just over $5,600, according to the King County Assessor's Office.
However, a red hot real estate market in the Seattle-metro and on the Eastside have pushed prices closer to the $1 million price tag, or even greater in many cases.
Homeowners will then have to decide whether it makes more financial sense to itemize and take the $10,000 capped deduction or take a standard deduction which has nearly doubled—now $12,000 for individuals and $24,000 for married couples.
Whether or not you take a hit on your tax bill will depend on the cost of your mortgage and other factors.
Related: Calculate your tax bill via New York Times
On top of changes to the federal tax code, property owners in King County will see a separate change in their bill as a result of the budget deal passed this year by the state legislature.
“We're going to send you your tax bill, and it's going to show a significant increase because the way the legislature funded McCleary,” said Wilson. “So, there's a one-two punch that's coming at homeowners, where you're going to get hit with basic property tax rates going up because of funding of education and then the federal government coming in and hitting you again.”
Wilson estimates King County property taxes next year could be an additional 20 to 25 percent. Bills will be sent out in February.
Some realtors have predicted the new tax bill could lower real estate prices in every state, or deter individuals who were looking to buy.
