Property Taxes & Income Taxes

[kfowler]

I ran across a situation this year with my taxes that I've never seen. Our property taxes here are split into summer and winter taxes. My winter bill arrives in December and is due in February. For my state and fed taxes, I've always used what ever amount I've paid for that year in my deductions. So if I paid the winter taxes in Feb, I'd include it in that years taxes.

So I sent in my state and fed, and was waiting on my refund from the state. When I received it, it was about $50 less than what I expected. When I looked into it, I found that the state of Michigan considers when your property tax was billed, not when it was actually paid. Normally, you'd never notice a difference if your property taxes are stable from year to year. However, since we've had such a large drop in home values here, I guess it was more noticeable.

Funny thing is no one I've talked to has ever heard of this. They all assumed you claim it in the year you paid it. Kind of like donations. Anyone know how the fed looks at it? I hope they don't have two separate rules.