12-08-2008, 02:10 PM
As I understand it your mortgage company wants $900 from you to cover your escrow shortfall.
An escrow account on a mortgage typically includes the cost of your home owners insurance and real estate taxes. Of the two usually only the real estate taxes are tax deductible. Note though that you can only take advantage of the tax deduction if you itemize deductions rather than taking the standard deduction.
Assuming itemizing deductions is the best way for you to file your return, paying the $900 now, soon enough to ensure the check is canceled by the end of 2008, results in that portion of the $900 that covers your shortfall in real estate taxes being tax deductible on your 2008 return.
Before you pay the $900 this year contact your mortgage company and get the breakdown of the $900 with respect to real estate taxes and homeowners insurance. If you decide to pay the $900 this year also ensure your mortgage company provides documentation as to the breakdown into real estate taxes and homeowners insurance for your tax records.
An escrow account on a mortgage typically includes the cost of your home owners insurance and real estate taxes. Of the two usually only the real estate taxes are tax deductible. Note though that you can only take advantage of the tax deduction if you itemize deductions rather than taking the standard deduction.
Assuming itemizing deductions is the best way for you to file your return, paying the $900 now, soon enough to ensure the check is canceled by the end of 2008, results in that portion of the $900 that covers your shortfall in real estate taxes being tax deductible on your 2008 return.
Before you pay the $900 this year contact your mortgage company and get the breakdown of the $900 with respect to real estate taxes and homeowners insurance. If you decide to pay the $900 this year also ensure your mortgage company provides documentation as to the breakdown into real estate taxes and homeowners insurance for your tax records.