Initial escrow payment at closing can i put this in taxes paid when filing tax?
On my 1098 form it says real estate taxes paid $0 but on the papers I got at closing it says in the other cost secion Initial escrow payment at closing: property taxes $xxx per month for 3 mo. and the line for at closing says the amount.
There is also a prepaid section with property taxes
The amounts paid into the escrow account do not count.
The bank is holding the money for when the property taxes are due and then when they paid it out of the escrow account, that is when you claim it on your tax return.
Property taxes are collected in arrears, so the seller had to pay the taxes to catch up at closing. That is why it is showing prepaid taxes. It is listed at a credit at closing correct?
At closing, the buyer reimburses the seller for the property taxes that have already been paid for the period starting from the date of sale to the end of the tax period.
However, for the purpose of deducting property taxes on their income taxes, the IRS rules still apply. The seller and buyer can deduct only the property tax corresponding to their ownership of the home--regardless of who actually paid the tax.
