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The amount you report as a tax deduction is the amount of property tax actually paid to the taxing authority during 2017. If your bank accidentally overpaid, then presumably you will either get a refund in 2018, or the credit will be applied to your 2018 property taxes and you will pay less next year. If you do get a property tax refund check from the school district in 2018, that will be taxable income because it was a deduction in 2017. You would add it under "refunds of state and local taxes" on the income page. If you get a credit and a lower tax bill, you just pay less tax and have less deduction next year.
You may need to check with the county or town tax receiver and the escrow company to make sure this is straightened out.
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