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Itemized Deductions Schedule-A

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Old 03-11-2007, 10:50 PM
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What items are tax deductible on my Escrow Statement?

Dear Taxguru,

Wow! Cant believe this site, especially w/ the Q & A! Its simple but great! Bravo!!

Nothing like this on the net that I have seen...

Now, for your help! We hade purchased a new home in 2006 were wondering what items are deductible on the escrow statement.. We did pay a substantial closing payment that included Title fees, doc fees, attorney fees, taxes, points and interest and other misc items. Please advise me to what is generally deductible on the tax return? Tks!

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Old 03-14-2007, 09:00 AM
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This is a very common question at tax time, and there is a lot of confusion as to what is deductible.

Mortgage Interest

The interest that is paid by the borrower during the time of closing is reported on the escrow statement. But, please note that this interest paid by you at time of closing is usually reported on a 1098 Int by the mortgage company, so you should have a copy of the 1098.

Property Taxes paid by Borrower
There should also be an amount that includes property taxes paid by the borrower at time of the closing statement. This is an amount that is sometimes excluded from the 1098 Int that the mortgage company has sent, because the payment of these taxes is usually held in a Trust account by your attorney. He will disburse these funds to the local tax authority independently. So please check carefully that you have accounted for all of these amounts, that is property taxes paid from the escrow statement.

Deductible Points
The next common item that is deductible are points. However, these points have to be paid from your funds with a check at time of closing. Only then, are the points deductible and included as interest paid on the 1098-Int under Points paid. The points that are paid at time of closing that are added to the outstanding loan are deducted over the life of the loan! Thus, $3,000 points paid for a 30 year loan, that are added to the outstanding loan, the taxpayer can deduct $3,000/30 or $100 per year!

Non-Deductible Expenses
The escrow costs, filing fees, attorney fees and other miscellaneous expenses are not deductible. These are added to the basis of the home.

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Last edited by TaxGuru : 03-14-2007 at 09:08 AM.

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