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March 19, 2020
Question

Bought house in October. prepaid homeowners insurance and prepaid interest. Can I deduct? Also can I deduct escrow payment

  • March 19, 2020
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Employee
March 19, 2020

Homeowners insurance is never deductible.  Money paid into your escrow account at closing is not deductible because its still your money--it is only deductible as of the date it is used to pay one of your property tax bills.

 

Daily interest paid at closing (usually to the end of the closing month) is deductible, but you will want to make sure it is not already included in your 1098.

 

You can deduct any property tax adjustments you paid to the seller at closing, as if you had paid the tax to the tax authority yourself.  (For example, if the seller paid the full year of taxes in January and you bought the house in June, you probably paid a credit of 6 or 7 months worth of tax to the seller.)