Where do I enter property taxes paid in escrow?

[HelenaC]

You don't deduct the property taxes paid to your escrow account since the money is still technically yours. 

• You may deduct the property taxes when your mortgage company (on your behalf) pays your property taxes to the county or other taxing body. 
• Your mortgage company should send you the information on form 1098 Mortgage Interest or the property taxes paid will be on your tax bill.

If it's for rental property you own, your property/real estate taxes are entered along with your other rental expenses.

Otherwise, you'll enter them in the Deductions & Credits section:

1. Open (continue) your tax return.
   (To do this, sign in to TurboTax and click the orange Take me to my return button.)
2. In the search box, search for the exact phrase real estate taxes and then click the "Jump to" link in the search results.
3. Answer Yes to the question Did you pay property or real estate taxes in 2016?
4. Enter your property/real estate taxes on the next screen.

When your property/real estate taxes are included on your 1098, you’ll enter them as part of your Mortgage Interest. But, if they aren’t listed on your 1098, you’ll enter them separately as property/real estate taxes.

Tip: If you own additional properties for personal use (for example, a cabin or timeshare), make sure to include the property/real estate payments for those as well.

Related Information:

• Where can I find out how much property or real estate tax I paid?
• What's the difference between real estate tax, property tax, and personal property tax?
• What if my property/real estate taxes are paid through my mortgage lender?

[shedenskog]

What happens if the mortgage company collects the taxes and insurance in escrow but fails to make the required payment in December of 2019? This is what has happened to me. I had over $9K in escrow however they failed to pay. I received a letter from the county that I was in arrears.  They finally paid in Feb 2020 what was due in Dec 2019. 

In addition, to that I have had another payment deducted in April and will have another in Dec 2020. All three payments will equal over $12K in total so I not only will have the deduction in 2019 I will miss out on, will I also only be able to claim $10K  for 2020.

I am sure this is not the first time this has happened to someone but I kind of feel like I am paying a huge price for the mortgage company who messed up not paying the property tax bill on time.

What can I do in my situation?

Thanks in advance,

Sean

[DoninGA]

@shedenskog You can claim all three payments made in 2020 on your 2020 tax return.  It does not matter that one of the payments was for the taxes owed in 2019, the payment for those taxes was made in 2020 so can be entered on your 2020 tax return.

[Carl]

Monies paid *into* an escrow account are never deductible. That money is technically your money until the date is is used to pay any assessed property taxes.

Your lender "should" be sending you an escrow analysis statement every year on the anniversary of the loan. It shows the amount you paid into escrow over the prior year based on their *ESTIMATE* of what your taxes and insurance will be. It will also show the "ACTUAL" amounts they paid for each as well as the date it was paid.

Finally, it will show any adjustments if necessary to future payments into escrow based on their "ESTIMATE" of what your taxes and insurance will be for the next 12 months. They "project" that estimate based on what was actually paid during the previous 12 months.

It's up to you to check that escrow analysis statement each year when you receive it, and to question the lender or escrow agent if something is questionable or just doesn't look right. It's also up to you to confirm the escrow agent received any bills for those items that are supposed to be paid from escrow.

I know I get a property tax bill in the mail each year from the county property tax assessor. On that bill it states, "DO NOT PAY - COPY ONLY. ORIGINAL SENT TO YOUR ESCROW AGENT".

Now my property taxes are due by Nov 30th each year. I'll keep tabs on things online and if my escrow account hasn't shown a payment for those property taxes by Nov 15th, I will fax a copy of my bill to the escrow agent, call them to confirm it was received and ask them to send me an e-mail confirming they received it. That way, if they pay it late, I win the argument on who pays the late fees.

But generally, when I check online I've always seen the payment for my property taxes in the first week of November. I then log onto the county website to confirm they did "in fact" receive that payment.

[shedenskog]

Good to know for 2020 but isn’t the limit $10k per year for property taxes?

[shedenskog]

Unfortunately I purchased and refinanced the home last year. First year in the home. Had to come to closing with $6k just to fund escrow. Thought the mortgage company would have paid them when they were due as the monies were in the escrow account. Unfortunately didn’t find out until I got the statement from the county that taxes hadn’t been paid. Just celebrating our anniversary of taking possession of the house at the end of May 2019 so there were no docs sent to me. First payment of refinance was Dec 2019. Coincidentally that is when the taxes were due. 

[Carl]

Just a guess, but it sounds to me like your closing agent didn't do their job. You may want to consider not using that agent in the future should you refi or purchase another property.

[shedenskog]

Closed in October, first payment not due until December. I don't think it was the closing agent but guess it could have been. The mortgage company was supposed to pay the property taxes in Dec 2019. Now not only will I not get to deduct more than $4k in property taxes in 2019, I will have paid over $12k in property taxes in 2020 and the limit is $10k. Just frustrated with the whole thing. Think once the loan is seasoned I will be doing my own escrowing, at least if it gets messed up it was me who did it. I felt like I followed the rules and did what everyone told me and I am the one who is getting the short end of the stick on this deal. Thanks for your help.