Post by myfirstname on Jan 27, 2013 15:06:09 GMT -5
DH and I closed on your house this past November, part of our closing costs was $975 interest for Nov and ~6k that went into our escrow account for taxes and insurance. We also had to cut a check to the seller for taxes they paid for Nov and Dec 2012 (our town collects in June for 2nd half of year). The tax forms we received from our lender only include the $975 interest, does this mean this is all we can deduct for 2012? What about the 2 months taxes we paid to the seller? TIA
Post by LoveTrains on Jan 27, 2013 15:33:00 GMT -5
The 1098 from the bank generally doesn't include your taxes. You generally keep track of that yourself.
My understanding is that you can deduct the money you paid for the Nov & Dec taxes, but you can't deduct the amount that you prepaid into escrow for future taxes.
Post by MixedBerryJam on Jan 27, 2013 15:52:45 GMT -5
How can you deduct them though if you didn't pay them to the town? How would the IRS know that X payment in X amount was you paying taxes to the previous owners and not, say, you paying the owners for leaving the refrigerator or something? And how can you be sure the previous owner isn't going to claim they paid the taxes anyway?
How can you deduct them though if you didn't pay them to the town? How would the IRS know that X payment in X amount was you paying taxes to the previous owners and not, say, you paying the owners for leaving the refrigerator or something? And how can you be sure the previous owner isn't going to claim they paid the taxes anyway?
Because you have your HUD-1 from closing that shows that you paid them?
I'm not 100% sure if you can do this, you should google around and find out.
So it went into escrow but you didn't use to pay taxes right? I dont think you can deduct it until it's taken out of escrow to pay taxes. That does show up on your 1099? Do you have enough to itemize? If you dont, it doens't even matter. It sorta sounds like you dont?
No, I don't think the OP is talking about the money put into the escrow at settlement. She is talking about a payment that she made directly to the seller for taxes that they had already paid but were for the time that the new buyer owns the home.
Money put into the escrow account at closing is certainly not tax-deductible.