SIOUX FALLS, S.D. - President Trump made a promise to have the GOP tax plan on his desk by Christmas and he delivered.
The Tax Cuts and Jobs Act goes into effect January 1st, and many are scrambling to keep up with the changes.
Right now, the sales, income and real estate deduction is unlimited.
But in a few days it will be capped at $10,000.
Property owners across the country are paying their real estate tax for 2018 early to reap the benefits that will expire when the clock strikes midnight December 31st.
“They've only got a few days to prepay their real estate taxes if they want to. Once it hits 2-18 that's it that's only a few days away,” accountant Charles Azzara said.
You might see more people in the Minnehaha County Administration building this week paying their property tax early. That's because changes in deductions are right around the corner.
“If your real estate taxes are over ten grand you're going to be limited to $10,000 on your write-offs,” Azzara said.
But how many homeowners fall into this category? Not many, according to the operating principle at Keller Williams Realty in Sioux Falls.
“In Sioux Falls it’s about a $500,000 or $6000,000 house before you get to the $10,000 range on the real estate...The average is only 200,000 so you're looking at three times the average sale price of a house before it really starts to affect people,” Tony Ratchford said.
Accountants at Azzara Tax Service in Sioux Falls say South Dakotans get a bit of a break on this deduction because the state doesn't have income tax.
“Minnesota, New York, Iowa, a lot of other states it is going to affect a lot because they're limited to $10,000. So, if their real estate taxes are six or seven, the state income taxes are 8 or 9, they're not going to get to write it all off,” Azzara said.
But before someone decides not to file early, Azzara says to consider how much they expect their standard deduction to be.
“Next year the standard deduction is going to be 12,000 for the singles and 24,000 for married filing joint. So, a lot of people might not be able itemize, so again they might want to just get their real estate taxes this year if you do pay early because next year there's going to be several people who won’t itemize,” Azzara said.
Ratchford says while many people might be focusing on the upcoming tax season his eyes are on the real estate market.
He says he expects the new tax plan to boost home values, especially houses priced in the $300,000 to $500,000 range.