Why not wait until the due date to gain as much interest as possible?

Why does it matter to you? It's not your interest.

It's best to not escrow and handle it all yourself.

Likely just batching for logitstical reasons. can not possibly hold all of it the end just due the volume of the accounts the owe.

Jay hits one point. Another is people used to deductions for eligible expenses and wanted to use the taxes on the year owed. So before 12-31 even though they are not past due until 2-1.

Lenders use independent contractors to pay the taxes correctly. Those companies will sit on the money 2-3 weeks and collect interest they can keep. It's pennies but whole lot of them.

SteveBott said:

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Jay hits one point. Another is people used to deductions for eligible expenses and wanted to use the taxes on the year owed. So before 12-31 even though they are not past due until 2-1.

Lenders use independent contractors to pay the taxes correctly. Those companies will sit on the money 2-3 weeks and collect interest they can keep. It's pennies but whole lot of them.

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They're gonna go broke…Pennies are on the way out.


I keed

Digital pennies?

wasn't this the plot of Superman 3

... and Office Space

Martin Q. Blank said:

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Why not wait until the due date to gain as much interest as possible?

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Yes, well when they do that, they pay your property taxes late and you can't deduct them on your tax return.

When I lived in Bee County, we got a discount for early payment...
3% in October
2% in November
1% in December
Due in Full in January...

When I had escrow, they took note of that and did get the 3% discount (sent my escrow balance into a tizzy that first year and I got the you owe moar moneys letter). I always did the October payment myself after I got out of Escrow following a Re-Fi.

In Brazos County I used to alternate and double up payments. So one year I'd pay no property tax, then the next year I'd pay in January and December. It put me over the threshold for itemization, so one year I'd itemize, the next I'd take the standard deduction.

combat wombat said:

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Martin Q. Blank said:

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Why not wait until the due date to gain as much interest as possible?

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Yes, well when they do that, they pay your property taxes late and you can't deduct them on your tax return.

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Why not?

Kenneth_2003 said:

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When I lived in Bee County, we got a discount for early payment...
3% in October
2% in November
1% in December
Due in Full in January...

When I had escrow, they took note of that and did get the 3% discount (sent my escrow balance into a tizzy that first year and I got the you owe moar moneys letter). I always did the October payment myself after I got out of Escrow following a Re-Fi.

In Brazos County I used to alternate and double up payments. So one year I'd pay no property tax, then the next year I'd pay in January and December. It put me over the threshold for itemization, so one year I'd itemize, the next I'd take the standard deduction.

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Also now back on the table with the OBBBA and the increase in the SALT cap to 40k instead of 10k. can't do this if you escrow and they pay whenever you want.

I've tried to tell many people that they should not escrow, but there are just too many people that aren't disciplined enough to set the money aside.

combat wombat said:

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Martin Q. Blank said:

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Why not wait until the due date to gain as much interest as possible?

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Yes, well when they do that, they pay your property taxes late and you can't deduct them on your tax return.

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you can deduct the property taxes in the year paid as long as the tax has been assessed. But that required itemization of deductions and up until 2025 was limited to 10k with the SALT cap.

For Texas - 2025 taxes are assessed in fall/winter 2025 and payable by 1/31/26. So you can deduct in 2025 if paid by 12/31/25 or deduct in 2026 if paid in 2026.

You cannot waive escrow if you have less then 20% equity. Also you can't waive on FHA/VA for any reason.

So for some it's not available

Because you can only deduct taxes in the year paid not in the year escrowed.

So you can deduct them on your tax return.

You can waive escrow up to 95% on Fannie/Freddie and on VA at any LTV. Most investors just have overlays that require escrow but the secondary market does not require. You just have to have an investor without the overlay. I have an LO doing a 1.2 mm VA loan right now at 100% with no escrow account.

Martin Q. Blank said:

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So you can deduct them on your tax return.

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You can. I didn't make it clear that you can't deduct the property taxes in the year that you paid them to the mortgage company, you can only deduct your property taxes in the year that the mortgage company pays them. Usually, it's the same year sometimes it's not..

Quote:

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In Brazos County I used to alternate and double up payments. So one year I'd pay no property tax, then the next year I'd pay in January and December. It put me over the threshold for itemization, so one year I'd itemize, the next I'd take the standard deduction.

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I would do the same until my mortgage was paid off; then I didn't exceed the standard married deduction with 2 years of payments.

dubi said:

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Quote:

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In Brazos County I used to alternate and double up payments. So one year I'd pay no property tax, then the next year I'd pay in January and December. It put me over the threshold for itemization, so one year I'd itemize, the next I'd take the standard deduction.

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I would do the same until my mortgage was paid off; then I didn't exceed the standard married deduction with 2 years of payments.

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Yeah, without mortgage interest there's almost no point to itemize. You just won't hit the standard deduction.