Mastering Your Mortgage: Finding Real Estate Taxes Paid on Form 1098

The Form 1098, Mortgage Interest Statement, is your golden ticket when it comes to claiming mortgage-related tax deductions. The quickest way to find the real estate taxes you paid through your mortgage is by checking Box 10 on the form. This box, labeled “Real estate taxes paid,” will contain the total amount of property taxes your mortgage servicer paid on your behalf during the tax year. It’s that simple, but let’s delve deeper to ensure you understand all the nuances.

Decoding Your 1098 Form

The 1098 form is furnished to you by your mortgage lender or servicer if you paid $600 or more in mortgage interest during the tax year. Think of it as a consolidated snapshot of your mortgage activity related to tax deductions. While the primary purpose of Form 1098 is to report mortgage interest, it conveniently includes real estate taxes paid, making your tax preparation process smoother.

Understanding the Sections of Form 1098

• Box 1: Mortgage Interest Received from Payer(s)/Borrower(s): This is the primary section, showing the total mortgage interest you paid during the year. This is a crucial number for claiming the mortgage interest deduction.
• Box 2: Outstanding Mortgage Principal: This is the balance of your mortgage at the beginning of the year.
• Box 3: Mortgage Origination Date: This is the date you originally took out the mortgage. This information is relevant for understanding certain limitations on the mortgage interest deduction.
• Box 4: Refunding of Overpaid Interest: If you received a refund of interest you previously overpaid, it will be reported here.
• Box 5 – 9: Property Information: This includes the address of the mortgaged property.
• Box 10: Real Estate Taxes Paid: The star of our show! This box displays the total real estate taxes your mortgage servicer paid from your escrow account on your behalf during the tax year.
• Boxes 11-14: These boxes relate to items such as private mortgage insurance (PMI) and other relevant mortgage-related payments.

Why Box 10 is Your Go-To

Box 10 on Form 1098 is specifically designated for reporting the real estate taxes paid on your behalf. Mortgage servicers often collect property taxes as part of your monthly mortgage payment and hold them in an escrow account. When the property tax bills become due, the servicer pays them directly to the taxing authority. Box 10 reflects the sum of all those payments made during the tax year. This centralized reporting simplifies your tax preparation, eliminating the need to track individual property tax payments.

Verifying the Accuracy of Box 10

While Form 1098 is generally accurate, it’s always a good idea to double-check the amount reported in Box 10.

Steps to Verify Your Real Estate Taxes Paid

1. Gather Your Property Tax Statements: Collect all property tax bills or statements you received from your local taxing authority during the tax year. These statements will show the amount of taxes assessed and the payment deadlines.
2. Review Your Mortgage Statements: Examine your monthly mortgage statements. These statements should show the breakdown of your payment, including the amount allocated to escrow for property taxes.
3. Compare and Reconcile: Compare the total amount of real estate taxes paid as reported in Box 10 of your 1098 form with the total amount indicated on your property tax statements. Also, reconcile this with the escrow payments detailed on your mortgage statements.
4. Contact Your Mortgage Servicer: If you find a discrepancy, contact your mortgage servicer immediately. Explain the issue and provide them with the supporting documentation (property tax statements, mortgage statements). They should investigate the discrepancy and provide you with a corrected 1098 form if necessary.

What if the Real Estate Taxes Are Not on Form 1098?

It is possible that your real estate taxes are not reported on Form 1098.

Reasons Why Real Estate Taxes May Be Missing

• You Pay Taxes Directly: If you pay your property taxes directly to the taxing authority, instead of through an escrow account with your mortgage servicer, your taxes won’t be reported on Form 1098. You will need to track your payments and use your property tax bills as proof.
• The Mortgage Servicer Didn’t Pay: If the mortgage servicer failed to pay your property taxes on time (e.g. a mistake) the form might be inaccurate. It’s essential to verify the information.

Frequently Asked Questions (FAQs)

Q1: What if I didn’t receive a 1098 form? If you paid $600 or more in mortgage interest during the tax year and didn’t receive a 1098 form, contact your mortgage servicer immediately. They are legally obligated to provide you with one. You can often access it online through your servicer’s website.

Q2: Can I deduct more real estate taxes than what’s listed on Form 1098? Generally, no. You can only deduct the amount of real estate taxes paid through your escrow account and reported on Form 1098, unless you paid property taxes directly. If you paid property taxes directly to the taxing authority, those amounts would be deductible, up to the deduction limit. Keep meticulous records of those direct payments!

Q3: What is the state and local tax (SALT) deduction limit? The Tax Cuts and Jobs Act of 2017 placed a limit of $10,000 ($5,000 if married filing separately) on the amount of state and local taxes (SALT) you can deduct. This includes real estate taxes, state and local income taxes (or sales taxes, if you choose to deduct sales taxes instead of income taxes).

Q4: How do I deduct real estate taxes if I paid them directly? If you paid real estate taxes directly to the taxing authority, include the total amount paid, up to the SALT limit, on Schedule A (Form 1040), Itemized Deductions. You will need your property tax statements as documentation.

Q5: What if I sold my home during the year? How do I calculate my real estate tax deduction? If you sold your home, you can only deduct the portion of real estate taxes you paid up to the date of the sale. This will usually be shown on the settlement statement (also known as the HUD-1 or Closing Disclosure).

Q6: Can I deduct real estate taxes on a second home? Yes, you can deduct real estate taxes on a second home, subject to the SALT deduction limit.

Q7: What if my mortgage servicer overpaid my real estate taxes? If your mortgage servicer overpaid your real estate taxes, they should refund the overpayment to your escrow account. This refund will offset your future escrow payments.

Q8: What if I have multiple properties with mortgages? Will I receive separate 1098 forms for each? Yes, you will receive a separate 1098 form for each mortgage you have, as long as you paid $600 or more in mortgage interest on each property.

Q9: What is the deadline for mortgage servicers to provide Form 1098? Mortgage servicers are required to furnish Form 1098 to borrowers by January 31st of the following year.

Q10: What if my spouse and I are divorced, and we both paid real estate taxes on the property? If you and your spouse are divorced, the person who actually paid the real estate taxes is entitled to the deduction, subject to the SALT deduction limit. Review your divorce decree to determine who is responsible for paying the property taxes.

Q11: Can I deduct real estate taxes if the property is in my business name? If the property is used for business purposes, you can deduct the real estate taxes as a business expense on Schedule C (Form 1040), Profit or Loss from Business.

Q12: Is the Real Estate Tax Deduction the same as the Mortgage Interest Deduction? No, the Real Estate Tax Deduction and the Mortgage Interest Deduction are distinct deductions. Mortgage interest is the amount you pay to borrow money for a home, while real estate taxes are taxes assessed by local governments based on the value of your property. Both are claimed as itemized deductions on Schedule A (Form 1040), and both are subject to certain limitations.

Understanding your Form 1098 and accurately reporting your real estate taxes can significantly impact your tax liability. Always double-check the information, keep meticulous records, and consult a tax professional if you have any doubts.