Escrow Payments showing as an Expense

In microsoft.public.money, neil154 wrote:

>I just wanted to let you guys know that I double checked with my accountant
>and he confirmed that the money "spent" into the escrow account is an expense
>and fully deductable as if I sent it to the insurance company or government.
>This is also true for non-business people who are itemizing their taxes.


Note that http://www.irs.gov/taxtopics/tc503.html says
================================================== =========
If a portion of your monthly mortgage payment goes into an escrow
account, and periodically the lender pays your real estate taxes out
of the account to the local government, do not deduct the amount
paid into the escrow account. Only deduct the amount actually paid
out of the escrow account during the year to the taxing authority.
================================================== ==========

I don't remember that you actually said you are subject to USA
rules.

Once again thanks for the feedback. The IRS and my accountant obviously
disagree. Who do you think I should believe? ☺

Thanks

"Cal Learner-- MVP" wrote:

> In microsoft.public.money, neil154 wrote:
>
> >I just wanted to let you guys know that I double checked with my accountant
> >and he confirmed that the money "spent" into the escrow account is an expense
> >and fully deductable as if I sent it to the insurance company or government.
> >This is also true for non-business people who are itemizing their taxes.
>
>
> Note that http://www.irs.gov/taxtopics/tc503.html says
> ================================================== =========
> If a portion of your monthly mortgage payment goes into an escrow
> account, and periodically the lender pays your real estate taxes out
> of the account to the local government, do not deduct the amount
> paid into the escrow account. Only deduct the amount actually paid
> out of the escrow account during the year to the taxing authority.
> ================================================== ==========
>
> I don't remember that you actually said you are subject to USA
> rules.
>
>

In microsoft.public.money, neil154 wrote:

>Once again thanks for the feedback. The IRS and my accountant obviously
>disagree. Who do you think I should believe? ?

Wellllll.... the misc.taxes.moderated group would probably give you
better answers in that area. ;-)


>
>Thanks
>
>"Cal Learner-- MVP" wrote:
>
>> In microsoft.public.money, neil154 wrote:
>>
>> >I just wanted to let you guys know that I double checked with my accountant
>> >and he confirmed that the money "spent" into the escrow account is an expense
>> >and fully deductable as if I sent it to the insurance company or government.
>> >This is also true for non-business people who are itemizing their taxes.
>>
>>
>> Note that http://www.irs.gov/taxtopics/tc503.html says
>> ================================================== =========
>> If a portion of your monthly mortgage payment goes into an escrow
>> account, and periodically the lender pays your real estate taxes out
>> of the account to the local government, do not deduct the amount
>> paid into the escrow account. Only deduct the amount actually paid
>> out of the escrow account during the year to the taxing authority.
>> ================================================== ==========
>>
>> I don't remember that you actually said you are subject to USA
>> rules.
>>
>>

I use money to track expenses for a rental property as well. What I
did was to create a separate expense category for the properties and
sub categories for capital improvements, maintenance, etc..
underneath. That way I can easily find the transactions at the end of
the year.

Now regarding your insurance question. The issue here is that the
money paid into escrow doesn't count as an insurance payment, until
the insurance gets paid. That is the way my accountant treats it. The
money in escrow can't be deducted until it is spent. The reason being
if you were to close the account, like refinance, you would get a
refund of the escrow dollars.

I just went through this because I changed the insurance to do payroll
deduction instead of from escrow. The mortgage company did an escrow
analysis and repaid the insurance portion of the escrow.

But to answer your question as to how to track it, when you download
your transactions, just split the transaction and enter the escrow
portion as a new category.

I wouldn't be overly concerned with tracking the escrow balance, just
pay attention to the taxes paid and the insurance paid each year. Did
you just acquire the property? If so then you are going to lose out on
the deduction for the months of escrow that you pay until the end of
the year. But in the future, you get the insurance deduction every
year, so its not a big deal.

good luck

On Sep 10, 1:38 pm, Cal Learner-- MVP <via_newsgr...@please.tnx>
wrote:
> In microsoft.public.money, neil154 wrote:
> >Once again thanks for the feedback. The IRS and my accountant obviously
> >disagree. Who do you think I should believe? ?
>
> Wellllll.... the misc.taxes.moderated group would probably give you
> better answers in that area. ;-)
>
>
>
> >Thanks
>
> >"Cal Learner-- MVP" wrote:
>
> >> In microsoft.public.money, neil154 wrote:
>
> >> >I just wanted to let you guys know that I double checked with my accountant
> >> >and he confirmed that the money "spent" into the escrow account is an expense
> >> >and fully deductable as if I sent it to the insurance company or government.
> >> >This is also true for non-business people who are itemizing their taxes.
>
> >> Note thathttp://www.irs.gov/taxtopics/tc503.htmlsays
> >> ================================================== =========
> >> If a portion of your monthly mortgage payment goes into an escrow
> >> account, and periodically the lender pays your real estate taxes out
> >> of the account to the local government, do not deduct the amount
> >> paid into the escrow account. Only deduct the amount actually paid
> >> out of the escrow account during the year to the taxing authority.
> >> ================================================== ==========
>
> >> I don't remember that you actually said you are subject to USA
> >> rules.