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Mortgage holder error negates a tax break
Dear Tax Talk:
My mortgage lender inadvertently failed
to pay my real estate taxes while holding the monies in escrow.
I didn't realize it until I received my year-end statement and saw
the error.
When I called, they said they merely erred and would
absorb any penalty and interest by the taxing authority. But I need
the tax deduction for 2002. Can I still take it since the monies
were effectively paid in throughout the year and, through no fault
of mine, were erroneously not paid by the lender?
Jeff
Dear Jeff:
Your e-mail address includes the initials CPA. Your question
makes me wonder if you are an accountant asking me a question that
was posed to you.
If your lender forgot to pay your taxes in 2002, then
you cannot claim a deduction for the taxes even though the money
was sitting in the escrow account.
When you pay expenses through an agent, your deduction
depends on that agent's payment of the expenses.
If he fails to pay the taxes from your escrow account,
your deduction is deferred until the year that he actually pays
out the funds.
-- Posted: Feb. 18, 2003
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