Mortgage Interest and Property Taxes

[howdidithappen]

If you made no mortgage payemnts during 2009 andyour mortgage payments included property taxes, how does one file their income taxes? If you paid nothing, can you include property taxes and mortgage interest as deductions?

[slam22]

If you made no mortgage payemnts during 2009 andyour mortgage payments included property taxes, how does one file their income taxes? If you paid nothing, can you include property taxes and mortgage interest as deductions?

Short answer is no.

[howdidithappen]

Thanks

Guess I was misinformed - I was told that you could claim them as deductions on your taxes (which I really found hard to believe) since the bank will add them to your mortgage balance....

[Stilltheone]

You can deduct mortgage interest and property taxes...IF YOU PAID THEM...otherwise, you can't deduct something you didn't pay.

[howdidithappen]

I agree with what you're saying

but a lawyer told me that an accountant told them you can deduct property taxes and mortgage interest since the bank is adding them onto your principal - is that what the bank does when they foreclosure on you? I could understand the bank wanting the property tax money THEY paid but how could you possibly claim a deduction for mortgage interest that wasn't paid? Isn't all that happens is your payment due increases and your equity in your house in lowered?

[Meatstick]

LMAO............. You get a Form 1098 from your mortgage company every year which states how much mortgage interest you paid and there is also a space for insurance and taxes.

If you don't make any payments then you may still get a 1098 but it will be blank. No payments = no deductions.

[howdidithappen]

I think the statement from the mortgage company would show an amount for property taxes paid even if they, i,e. the mortgage company, not you, paid them. They don't want the house to go to a tax sale.

[barbj]

I am a CPA - you can't deduct what you didn't pay. Personal taxes are filed cash basis. Not all 1098's report tax and insurance paid.

[howdidithappen]

Thank you CPA. Years ago my escrow account for my property taxes was short (it was a new house and the taxes were underestimated by about $2000 by the builder to me - there was a huge increase the first year also). The statement from the bank indicated the higher amount, i.e. what the bank paid (not what I paid to the bank for the escrow account). When I did my taxes that year I only declared what I had actually paid. The next year when I was paying more into my escrow account to make up for the shortage, I still only declared on my taxes the amount that was actually paid. So guess I never claimed $2000 in property taxes that I had paid.

[limage]

I'm not sure if I agree with the logic that you can't deduct the taxes. If my Dad paid my RE taxes for me, would I still not be able to deduct them?

[helpmeout]

but a lawyer told me that an accountant told them you can deduct property taxes and mortgage interest since the bank is adding them onto your principal - is that what the bank does when they foreclosure on you? I could understand the bank wanting the property tax money THEY paid but how could you possibly claim a deduction for mortgage interest that wasn't paid? Isn't all that happens is your payment due increases and your equity in your house in lowered?

I am an accountant and I can safely state that you can't claim mortgage interest or property taxes unless you are paying them. Just because the bank is adding the property tax to the principal doesn't mean that you can deduct the taxes.

[helpmeout]

I'm not sure if I agree with the logic that you can't deduct the taxes. If my Dad paid my RE taxes for me, would I still not be able to deduct them?

No, but your dad would be able to. Although, if he doesn't claim them and doesn't make a stink about it, you would probably get away with claiming them.

You can't do this with a bank as the bank is claiming the property tax that they are paying as an expense on their taxes.