Arrears> Re Taxes

[BOB W]

Client is playing catchup with mortgage that is in arrears. Bank paid old RE Taxes to the tune of 47,000 but T/P did not pay bank yet for those funds. Bank is now billing client along with mortgage bill.

My question is: Can my client deduct the $47,000 that the bank paid on his behalf?

[DaveO]

Not until he has paid it. I would think the rules are the smae for claiming timely paid interest and taxes. When paid, not when accrued.

[veritas]

Did the bank add

the taxes to the mortgage?

[BOB W]

the taxes to the mortgage?

Yes they did...........

[veritas]

So

Yes they did...........

I would say your client paid the property taxes at that point.


Another thought, the additional amounts "borrowed" would be equity debt.

[BOB W]

I would say your client paid the property taxes at that point.


Another thought, the additional amounts "borrowed" would be equity debt.

I like your Equity Debt comment..............makes sense to me............. Bank has set a 12 month payback which my client can't make so he is applying for a reduced payment for a longer time period.

But equity debt sounds right...........................I'm thinking it over as I have to file his 2009 tax return this week.

[taxea]

I would check with the bank to see whether they consider this an equity loan. If not, and if not a mortgage loan then client deducts the interest and prop tax in the year he pays it.

[BOB W]

I would check with the bank to see whether they consider this an equity loan. If not, and if not a mortgage loan then client deducts the interest and prop tax in the year he pays it.

Good points......I'm still thinking.........................