Property Taxes Paid while in Modification

[MAJ]

If property taxes are paid while in a load modification are the taxes still deductible?

I vote Yes, since they are being paid and the debt is still owned by the taxpayer. Just transferred to the bank.
I draw this conclusion based on if I pay my Dr. bill bill my Visa card I can still deduct it. I just transferred the ownership of the debt.

Yes?

[taxea]

When in question I get the taxes paid from the assessors office website.

[MAJ]

Taxes while in Modification / Foreclosure proceedings.

yes, The tax office # - Not the MTG paid amount - is the right amount to deduct.
But - the client has not paid their mortgage in months pending a modification.
So, technically, they did not pay the mortgage for most of the year.
But - the bank paid the taxes -
Client still owns the house and obligated to pay the loan (no bankruptcy that I know of ).
So, even though Bank paid the taxes the debt is still owed by the client (as of now).

So, the question is, can the client claim the full years property Tax deduction?? I think YES.

Thank you in advance.

[Burke]

You can bet if the bank paid the taxes, they are adding that to the outstanding indebtedness. Until he pays the bank enough to cover the taxes, IMO, no deduction.

[Gretel]

I believe it depends. If this is a modification for sure and it is just a matter of time to get the new loan then I would treat it the same as escrow payment by the lender. However, if there is a chance that new loan is negotiated I would wait with filing the tax return until this is clear.

[TAXNJ]

Legal advice

Since there are different types of loan modifications and terms, have you talked to client's attorney?

There may or may not be issues with payments made as to what is covered or what may not.

Also GRETEL & BURKE reply posts provide some good insight

[taxea]

The bank (mortgage company) has to have an customer escrow account from which they pay prop taxes for their customers. If he was required to pay the taxes to the bank and they paid the amount to the assessors office then for all intent and purpose TP paid the tax. Pick up the amount from the assessor's records and deduct it on his return.

[S T]

If the Homeowner/lender has an impound/escrow account, it will show on the form 1098 Mortgage Interest and the Property Tax Paid, and usually the lender will provide a detail of monies paid into the impound/Escrow Account from the homeowner and then show when lender disburses for items such as Property tax and Homeowner's Insurance.

I have seen under foreclosure and late where the account goes negative - due to no payments being made by the homeowner -

Just because the Lender might have made the property tax payment on the property does not mean it is tax deductible by the Homeowner/Taxpayer if the Homeowner/Taxpayer is in delinquency or foreclosure, modification.

Request a full account transcript from the lender - sometimes you can obtain online.

Sandy

[Burke]

The bank (mortgage company) has to have an customer escrow account from which they pay prop taxes for their customers. If he was required to pay the taxes to the bank and they paid the amount to the assessors office then for all intent and purpose TP paid the tax. Pick up the amount from the assessor's records and deduct it on his return.

I agree with that. But I think the poster stated the TP did not pay any funds from which taxes could be escrowed. Until he does, I vote no deduction.

[MAJ]

For the record....

Based on information provided the client filed short form. We discussed the various topics and the difference in refund.
Until the client can provide a solid answer and/or proof they agreed to not take the deduction. The difference on the refund was about $500
Should things provide information to the contrary we can alway file an amended.

Thanks for all the input - Greatly Depreciated!!


8-)