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Property owners rush to get ahead of the new tax law

  • 1 bills

Published: 12/26/2017 10:48:28 PM

NORTHAMPTON — A last-minute loophole has local property owners rushing to pay property taxes before a new year, and the new tax bill, put a cap on how much they may write off as federal tax deductions.

“People who want to prepay in 2017 under the current tax law can certainly make that payment either in person or online,” said Northampton Mayor David Narkowicz.

Northampton joins communities like Amherst, Hadley, Easthampton, Granby and Belchertown in allowing residents to pay third- and fourth-quarter fiscal year property taxes early in hopes of skirting around the new $10,000 cap on federal tax deductions imposed by the new tax bill. Supposedly, property owners have until Jan. 1 to pay their 2018 fiscal year property taxes in the 2017 calendar year.

Because the cities and towns follow a fiscal year, which for 2018 began on July 1, and the IRS follows the calendar year, the last few days of December allow for a peculiar loophole where residents can apparently pay the final two quarters of their 2018 property taxes before the new tax bill kicks in.

“In this case, this is sort of a new area for us because it’s all driven by this new tax change,” Narkewicz said.

States with high property tax rates, like New York, Connecticut and California, will be the most affected, while the Pioneer Valley, with relatively low estimated property value of $298,562, won’t be drastically affected. On Friday, New York Gov. Andrew Cuomo signed an executive order allowing anyone who pays local property taxes before Jan. 1 to write them off under 2017 laws.

As reported by the Associated Press, it is not clear whether the IRS will accept the eleventh-hour deductions. The bill specifically prohibits any federal deductions for income taxes paid ahead of time, but makes no mention of local property taxes.

A representative from the Massachusetts Department of Revenue declined to comment.

“That’s how the tax law works,” said Bernice F. Lord, a certified public accountant based in Easthampton. “Whenever you pay it is when you can deduct it.”

Lord said she assures her clients that any property taxes paid before the year’s end can be written off as federal deductions in 2017.

However, South Hadley Town Administrator Michael Sullivan was not so sure. He said the town will not accept any early payments, and saw the loophole as a payday for the wealthy.

“It’s only people with money, extra money, who can create this windfall,” said Sullivan. “You’re not sticking it to the Trump administration; you’re empowering them.”

Lord estimates about one third of her 400 clients will be affected by the new tax deduction limits. Dozens have called her asking what they should do.

“With that and also the doubling of the standard deduction, it’s going to affect a lot of people,” Lord said. “It depends on what tax bracket you’re in. Obviously, the higher it is you’re in, the more you’re going to save” by paying early.


Town Manager Paul Bockelman said the town published an alert about the Jan. 1 deadline on the town website in response to numerous inquiries made to the tax collector’s office in recent weeks.

“Historically there’s always a few people interested in prepaying because of the tax implications for the state and the fed,” Claire McGinnis, co-finance director and tax collector, said.

But since mid-December, McGinnis said, her office has received about 10 payments per day.

“What we’ve seen this December is quite significant,” McGinnis said.

With a tax rate of $21.14 per $1,000 valuation in Amherst, and the average home assessed at $353,000, the average tax bill for a residential property is $7,462. Amherst has 903 properties that exceed $10,000 in property taxes, according to Assessor David Burgess. A significant number of these are commercial, he said.


According to Narkewicz, the city will be accepting early property tax payments for the final two quarters of the fiscal year to allow residents to claim deductions under the 2017 law. The bills were sent out yesterday, and can be paid in person, online or in the mail.

“There’s been a lot of chatter about this online and in news media but every individual person needs to understand their own situation and be wise about whether or not they even have the ability to do this,” Narkewicz said.

The average single-family home in Northampton is valued at $360,907, and pays a tax rate of $17.04 per $1,000 assessed for an average annual bill of $5,230, according to Narkewicz.

South Hadley

Sullivan said the town will not accept early tax payments in an effort to write off additional tax deductions. After bills are sent on Dec. 28, any checks mailed or delivered to the town will not be filed until Jan. 2.

In South Hadley, the average value for a single-family home in fiscal year 2018 is $247,600. With a tax rate of $17.64 per $1,000 assessed value, the average annual tax payment is $4,367.66.

“There’s clear language for how you can pay taxes early,” Sullivan said. “The assessors take a specific vote to allow it, but I haven’t heard one community that’s done that.”

Sullivan, who also serves as the town’s acting treasurer collector, referenced Massachusetts General Laws Chapter 60, subsection 2, governing how local municipalities can collect property taxes. His town consulted with Eric Kinsherf, an accountant specializing in financial advising for businesses and municipalities, who told them the IRS is unlikely to allow the eleventh-hour write-offs.

“We’re just trying to do the best we can and stay out of trouble,” Sullivan said.

Sullivan fears the new cap could make residents more likely to protest future tax increases, which happen nearly every year and are necessary for the upkeep of public roads, services and schools.


Easthampton mailed its quarterly property tax bills last week and will be accepting early payments for bills due in February and May.

“However, as a municipal tax collector, neither I nor my staff make any claims as to how those payment are to be applied to an individual income tax return,” wrote Melissa Zawadzki, Easthampton’s finance director, in an email. “This is a question best answered by an income tax professional.”


In Hadley, tax collection will proceed as usual. Residents have always had the option to pay ahead of time for property taxes already billed. Right now, residents can pay two quarterly tax bills for the February and May 2018 deadlines. The town’s property tax rate is $12.09 per $1,000 and the average property tax bill is $3,881, according to town Assessor Daniel H. Zdonek Jr..

Assistant Town Collector Kimberly Pieffer said Tuesday afternoon that a number of residents have called in looking for tax bill information and citing the income tax changes.

Printed bills were mailed out Friday, she said.

Pieffer said some residents were interesting in paying beyond their third and fourth quarter bills but it isn’t possible.


Belchertown officials plan to mail out property tax bills Wednesday, and will be accepting early payments.

“I have seen a slight uptick in requests to pay ahead,” said Lisa Banner, the town’s treasurer and tax collector. “We’ve been encouraging them to prepay.”

In Belchertown, where the property tax rate is $18.19 per $1,000 assessed value, and the average annual property tax payment is $4,768, few property owners would reach the $10,000 deductible limit, Banner said. The average single-family home is valued at $262,163, according to John Whelihan, the town’s director of assessments.

“Out here in western Massachusetts it’s not really the norm to have a bill that high,” Whelihan said. “The tax changes really depend on where you live and what state you reside in and what part of the state.”


Granby may also accept early property tax payments, with no guarantees on whether they will be written off as federal tax deductions.

The average property value for a single-family home in Granby is $246,400. With a 2018 tax rate of $19.93 per $1,000 assessed, the average annual tax payment would be $4,910.75, according to the town’s assistant assessor, Keri-Ann Wenzel.

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