Q about property tax and tax filing in april.

[Semidevil]

so this year, the property tax on my house will be approximatly 2k. my mortgage company will pay for it on my behalf through my escrow account. I knew long before that my escrow will not be enough to pay for it, so I saved enough money on my own in order to take care of it.

my mortgage rep told me that they will pay my escrow this december, and if I end up having a negative escrow, it will roll over to my monthly payment in 2008. I asked her when is the deadline for me to give them extra funds so it wont affect my monthly payment. she told me March 2008. is that correct? I aske her again and she said yes. so even though they will pay my escrow early, I will not get hit with extra monthly payments on January or February? Is that correct? can someone confirm this for me? I"m not understanding.

also, I am able to claim the property tax when it comes to tax filing, is that correct? so If I want to be able to claim it in April, is it in my best interest to send my saved up money before this year ends? I'm not sure how this works. If I send in my payment in February in 2008, does it mean I cannot claim it anymore?

If I really have until March to get my property tax taken care of, that would be great, because I can use some of my current funds for other important things coming up.

If anybody can clarify, that would be great.

thanks.

 

[spidey07]

Normally if you're short/late on property taxes there is a penalty. Depends on when your escrow pays the taxes. If they pay in full on time there is no penalty.

Yes you can deduct it.

Also realize by having an escrow you are giving your mortgage company an interest free loan. Not good. Get rid of the escrow and save/pay them yourself with gains.

 

[RBlount]

There are two issues here, (1) how the Lender will handle the difference between your escrow account balance and (2) how to claim you Property Taxes on tax return.

1) If you do not have enough money in your Escrow account when your taxes come due, your lender will front you the money. They will pay your full tax bill, even if it more than what is in your Escrow account. (This isn't being nice, they have a vested interested in your property and don't want to lose it to Tax Lien.)

You will probably receive notice right after they pay notifying you of the difference. Most lenders will give you the option of paying the difference immediately or adding a smaller amount to each month's payment (for example if you owed $1200 more in taxes than you had in your escrow account, you could pay your lender back $100/mo.) I have had this happen multiple times and have never had to pay interest on the Escrow loan. Basically my bank gave ME an interest free loan. I always choose to pay over time.

2) The IRS only cares when your Property Taxes were paid to the government. If your taxes are due in December, you get credit for them on your 2007 Tax Return (filed in 2008). The IRS doesn't care if your Lender had to pay for you. As far as they are concerned, you get full tax credit for the amount paid. Your lender will include the full amount on your 1099-INT form.

 

[Semidevil]

well, my main concern was whether they would give me the option to pay the difference, or they would just spread it across my 2008 mortgage bill without letting me know. personally for me, I would prefer to get it taken care of so my monthly bill will not increase(but I would als like to do it later then sooner so I can have some extra cash now).

But as long as they send me notice and give me the option, I think I should be fine.

now regarding when they send the notice, does this vary from state to state and mortgage company? the rep told me even though they pay my tax in december, I will have until march/april to front them the money? is that standard??