Prepayment of 2018 Real Estate Taxes FAQs
Q: Can I prepay my 2018 City of Alexandria real estate taxes?
A: Yes, the City will accept prepayment of real estate taxes. For more information on how to prepay, visit www.alexandriava.gov/Payments.
Q: Can I deduct prepayment of 2018 and future City of Alexandria real estate taxes on my 2017 Federal income taxes?
A: Although the City cannot speak to the deductibility of income under federal law, the IRS has issued an advisory stating that “A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017. State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.” State law and the City Charter provide that all real property must be assessed at fair market value as of January 1 each year, and the amount of the real estate tax cannot be assessed until the tax rate is set by City Council in May of each year. Consequently, there is no legal or practical way for 2018 Alexandria property values or real estate taxes to be assessed in 2017.
Q: How do I estimate my tax liability?
A: Tax liability, or “tax levy,” is dependent on two factors: a property’s assessed value, and the tax rate set by the locality. While the City of Alexandria determines a property’s assessed value as of January 1, City Council adopts the annual property tax rate in May as part of its annual budget deliberations. It is impossible to know your exact tax levy until both of these variables are known.
Q: How does City Council set the tax rate?
A: Under Virginia law, imposition of the tax rate is closely tied to the adoption of the annual budget. State law and the City’s Charter both require a balanced budget; and, given that real estate taxes comprise approximately 60 percent of the City’s General Fund, there is simply no way to adopt a tax rate until the budget has been developed by the City Manager and deliberated upon by the City Council, with legally required opportunities for input from the public. State law imposes strict requirements for advertising assessed value increases, the proposed tax rate, and public hearings for the annual budget.
Q: Can the City provide a preliminary assessment so I can deduct my tax prepayment?
A: There is nothing in Virginia law, in our Charter, or the City ordinances that provides the authority to establish “preliminary assessments.” Even if we were able to somehow do so, this would not establish any tax liability, according to the IRS. Likewise, simply assuming the existing assessments and tax rate will remain unchanged, is nothing more than an estimate at this time, and would seem to run afoul of the IRS’s ruling about “anticipated real property taxes that have not been assessed.”
Q: Can anyone at the City give me advice on whether or not to prepay my taxes?
A: No. You should consult with a tax professional for this type of advice.
Q. Will the City refund my prepayment?
A. Yes. If you would like a refund of your prepayment, please complete the refund form below and return it to firstname.lastname@example.org.