what happens when a taxpayer pays escrow throughout the year, and the mortgage company sends the funds the next calendar year. Since the client paid during the current year, can they still take the real estate tax deduction in the current year even though the mortgage company failed to send it?
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See TTB 4-9. -
client should complain to the bank for holding those funds. you can only take what the bank or finance co paid to the city , not the escrow
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The bank should pay the property tax (and insurance) bill when due, not any sooner. Customer usually gets interest income on the amounts in escrow (may be at a very low rate these days, but that can change). I think the word "failed" was incorrectly used in the question that started this thread, because the whole reason the bank requires escrow is to enforce the bank's interest in the property and get taxes paid on time -- so why would the bank be late?
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No. The tax is not due until the due date, which should be the date the mortgage co pays it. TP is not paying the taxing authority, he is allowing (ok, compelled by) the mortgage company to accrue it for their own benefit and protection to assure that it is paid when due. That is why it is called "escrow."Comment
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