An effective Year end Tax Strategy is to Prepay your
Real Estate Taxes!

Boost your Tax Deduction this year by Prepaying your Real
Estate Taxes.  If you are in a higher tax bracket this year you
will protect more of your income by prepaying your Real
Estate Taxes due next year!

You can increase your deduction for real estate taxes this year by
prepaying your real estate taxes due next year.  This is a standard
year end tax planning strategy that many people utilize.  This is a very
attractive strategy if you will be in a lower tax bracket next year
because by prepaying your real estate taxes this year, you are
allowed to deduct your prepaid real estate taxes against your
current income.  This reduces your tax liability for the current year.

Example:  Jeremy makes $78,000 in 2007, $64,000 in salary and
$14,000 in a stock sale of XM Satellite Radio.  Next year Jeremy
will make $68,000.  Jeremy will have a real estate tax liability of
$1,300 in 2007.

For 2007, Jeremy is in the 33% federal tax bracket.  In 2008 he will
be in the 28% federal tax bracket.  By prepaying his real estate
taxes this year Jeremy will protecting more of his income. 

One thing you need to do is check with your local tax collector
to be sure that you are eligible to do this.  Your tax collector may
regard the prepayment as a "nondeductible deposit" instead of a
payment, thereby negating your deduction for the current year.  If
in doubt, call your local tax collector and ask.

If your mortgage has an escrow impound account for property
taxes, your lender might not allow you to prepay in the current
year taxes that become due next year.  Again, if in doubt, call your
lender and ask. 

IMPORTANT NOTE:
When you prepay your property taxes in a given year, it's really
only a one-year tax break.  Using the above example, let's assume
Jeremy prepaid his 2008 property taxes at the end of 2007.  In 2008,
Jeremy will get a smaller tax deduction because he'll pay no
property taxes or he will have to continue to prepay his property
taxes in future years to get his full tax deduction.
 



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