topic If we pay property taxes by escrow, are they still deductible? in Deductions & credits

If we pay property taxes by escrow, are they still deductible?

eugenio2016 — Mon, 03 Jun 2019 20:29:12 GMT

Yes, your property taxes are still deductible if you pay...

Heather14 — Mon, 03 Jun 2019 20:29:13 GMT

Yes, your property taxes are still deductible if you pay them through via an escrow account. You will find the amount of property taxes paid through escrow on your Form 1098. Form 1098 (without any letter suffix) is a mortgage interest statement. It shows how much mortgage interest, points, and PMI you paid during the previous year. If you're also paying your real estate taxes (aka property taxes) through your lender, you will find that in Box 5 on your 1098 form, or you can call your lender.

For more information on deducting real estate taxes, please see the following TurboTax FAQ:

https://ttlc.intuit.com/replies/3300663

For instructions on entering your real estate taxes in your return, please see the following:

https://ttlc.intuit.com/replies/4793197

Re: If we pay property taxes by escrow, are they still deductible?

Vanessa A — Tue, 31 Dec 2019 00:36:56 GMT

Yes, as long as the payment has been made it is still deductible. You will deduct the amount that your escrow paid, not the amount that you pay into escrow.

Re: Yes, your property taxes are still deductible if you pay...

samscofield11 — Wed, 03 Feb 2021 22:37:16 GMT

Hi,

I closed on a new home in November 2020 and I had to pay/escrow my property taxes at closing. These taxes are escrowed for 2021 property taxes. Do they count towards a deduction for my 2020 taxes?

Thanks,

Sam

Re: Yes, your property taxes are still deductible if you pay...

Opus 17 — Wed, 03 Feb 2021 22:54:29 GMT

No, because the money is still yours even if it is an in escrow account, until it is actually used to pay a tax bill.

However, you likely have some property taxes on your closing statement. You are allowed to deduct property taxes that are paid to the town or county for the period of time that you owned the house, even if you did not directly pay them.

For example, suppose the property taxes in your town are paid on January 15 to cover the calendar year January 1 through December 31. If you closed on your house on November 30, that means the previous owner paid a full year of property taxes the previous January. You probably gave that owner a credit for 31 or 32 days worth of property taxes at closing, representing the tax for the period of time when you owned the house from November 30 to December 31. You can deduct that property tax as if you had paid it to the government directly.

Re: If we pay property taxes by escrow, are they still deductible?

TXDAD — Tue, 27 Apr 2021 03:25:25 GMT

While the through escrow account paid all the taxes and generated tax documents. Due to forbearance, I did not pay the banks either mortgage principal or escrow. But at the end of the I am liable to pay it once the forbearance expires. Can I still deduct the taxes that are shown on 2020 1098 generated by the bank? TIA

Re: If we pay property taxes by escrow, are they still deductible?

CatinaT1 — Tue, 27 Apr 2021 12:56:48 GMT

Yes. You paid it in 2020 through your escrow account.

Re: If we pay property taxes by escrow, are they still deductible?

Opus 17 — Tue, 27 Apr 2021 13:06:13 GMT

@TXDAD wrote:

While the through escrow account paid all the taxes and generated tax documents. Due to forbearance, I did not pay the banks either mortgage principal or escrow. But at the end of the I am liable to pay it once the forbearance expires. Can I still deduct the taxes that are shown on 2020 1098 generated by the bank? TIA

Is your escrow account balance negative now? I'm not quite clear on how this is working.

However, if the taxing authority was actually paid, you can deduct it. Either it was paid from your current funds, or it was paid with a negative balance that you must repay in the future. (And even if you don't pay it, the bank will take it out of your hide when they foreclose, so you will ultimately pay it one way or the other.)