Tuesday, January 27, 2015
Verify with Your Lender
If you have a mortgage with an escrow account to pay your property taxes and insurance, you expect the company servicing your loan to pay this year's taxes this year so that you can deduct them on your 2014 income tax return. After all, your monthly payment includes 1/12 the annual amount so there will be money available for them to be paid on time. IRS requires that expenses must actually be paid in the year that a deduction is to be taken. The predicament occurs when you have made your payments but the mortgage company did not pay the taxing authority in the tax year they were due. If they paid your 2014 taxes in January of 2015, they would not be deductible for you until you file your 2015 income tax return. Verify with your lender after you make the December payment that they did indeed pay your property taxes. The question for your lender's customer service is: "Have you or will you pay the 2014 property taxes this year so I am eligible to deduct them on my 2014 income tax return?&"