Help with Mortgage Form 1098 when paying off loan mid-year - property tax confusion
I'm planning to completely pay off my mortgage this year and I have some questions about tax forms. My itemized deduction has been higher than the standard deduction, partly because I have a significant amount of mortgage interest, though my SALT is capped at the $10k limit. For my Mortgage Form 1098: The lender reports both my mortgage interest and property tax. My property tax gets paid from my escrow account twice annually - once around July and again in November. Here's what I'm confused about: If I pay off my mortgage in the middle of 2025, it might be before my first property tax payment (July), or possibly before the second payment (November). Once I pay off the mortgage, I'll need to handle property tax payments myself directly. In this situation, will my bank generate a 2025 Form 1098 that shows my mortgage interest and possibly just one property tax payment? This form wouldn't include any property tax I pay myself after closing the mortgage. So how should I properly report everything (both the mortgage interest and ALL property tax)? Where would I get documentation for the property tax I pay directly? Should I expect to have two separate 1098 forms for 2025? Would I get a second 1098 from my county government? Or can I typically find this information online somewhere?
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Mei Lin
You've asked some great questions about handling your taxes after paying off your mortgage! When you pay off your mortgage mid-year, your lender will issue a Form 1098 that includes the mortgage interest you paid up to that point and any property taxes they paid from your escrow account before payoff. This form typically arrives in January 2026 for the 2025 tax year. For property taxes you pay directly after closing the mortgage, you won't receive a 1098 from the county. Instead, you'll get a receipt or payment confirmation when you pay those taxes. Keep these documents as proof of payment! Many counties also provide online access to your property tax payment history through their treasurer or tax assessor website. When filing taxes, you'll report all property taxes paid during 2025 on Schedule A, regardless of whether they appear on a 1098 or you paid them directly. Simply combine the property tax amount from your 1098 with the amount from your personal payment receipts.
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Liam Fitzgerald
•Thanks for the info! Quick question - after I pay off my mortgage, will the county automatically know to start sending the tax bills directly to me? Or do I need to contact them to update this information?
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Mei Lin
•The county doesn't automatically know when your mortgage is paid off. You should contact your county tax assessor's office after paying off your mortgage to ensure future tax bills are sent directly to you. This is an important step many homeowners forget! Typically you can do this by calling your county tax office or visiting their website. Some counties even have a specific form for this purpose. Don't wait until tax bills are due - do this right after your mortgage payoff to avoid missing important notices.
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GalacticGuru
After going through the exact same situation last year, I discovered https://taxr.ai which was incredibly helpful for analyzing my mortgage documents. I paid off my home in June and was completely confused about how to handle the property taxes for the rest of the year. The tool analyzed my closing statement, the partial year 1098, and my county tax receipts to confirm exactly what I could deduct. It flagged that I almost double-counted some of my property taxes that were included in my escrow calculations during payoff. What I found really helpful was that it explained exactly which line items from each document needed to go on my Schedule A. If you're dealing with multiple tax documents from different sources like I was, it might save you some headaches.
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Amara Nnamani
•How exactly does that work? I'm in the same situation and worried about making mistakes with my property tax deductions. Does it just review the forms or does it tell you exactly how to enter everything on your tax return?
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Giovanni Mancini
•I'm skeptical about these online tools. How is this different from just talking to my regular tax guy? My CPA handles all this stuff for me, but I'm curious if this would actually save me money on his fees.
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GalacticGuru
•It works by analyzing all your tax documents together - you upload your 1098, property tax receipts, and mortgage payoff statement. The system flags potential issues and shows exactly what amounts should be reported on Schedule A, line by line. It's more thorough than just reviewing individual forms because it cross-references everything. The difference from a CPA is mainly cost and convenience. You get immediate feedback rather than waiting for an appointment, and it's specifically designed for mortgage and property tax situations. It won't replace comprehensive tax advice, but for this specific mortgage payoff situation, it helped me verify I was handling everything correctly before submitting my return.
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Amara Nnamani
Just wanted to update after trying https://taxr.ai for my mortgage payoff situation. I was really confused about handling my property taxes after paying off my mortgage in March, but this actually sorted everything out quickly. The system highlighted that my lender had included prorated property taxes in my final mortgage statement that didn't appear on my 1098, which I would have completely missed. It also confirmed that the receipt from my county for my November payment was properly formatted for tax purposes. Saved me from potentially making a mistake on my Schedule A and gave me confidence that I wasn't missing any deductions. Much easier than trying to figure this out from various IRS publications!
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Fatima Al-Suwaidi
If you're having trouble getting clear answers about your property tax situation, I'd recommend using https://claimyr.com to get through to the IRS directly. I was confused about similar mortgage payoff issues last year and spent WEEKS trying to call the IRS without getting through. Claimyr got me connected to an actual IRS representative in about 15 minutes when I'd previously been stuck on hold or disconnected. The agent clearly explained how to handle partially reported property taxes when you pay off a mortgage mid-year. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c It was especially helpful because my situation had some complications with an escrow refund that affected what could be deducted. The IRS agent walked me through exactly how to report everything correctly.
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Dylan Cooper
•How does this actually work? I thought it was impossible to get through to the IRS these days. Does this just put you in the regular queue or does it actually get you to a human faster?
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Sofia Morales
•This sounds like BS honestly. There's no way to "skip the line" with the IRS. They're understaffed and overwhelmed, and everyone has to wait. I've tried various "tricks" and none of them work. I doubt this is any different.
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Fatima Al-Suwaidi
•It doesn't skip the line - it uses an automated system that continually redials the IRS using optimal timing patterns until it secures a place in the queue. When a spot opens up, you get a call connecting you directly to the IRS queue at the right moment. It's basically doing the frustrating redial work for you. The system monitors IRS wait times and call volumes to identify the best times to get through. It's not magic - it's just automating the tedious process of trying to time your calls perfectly. You still wait in the regular queue once connected, but you don't waste hours just trying to get into that queue in the first place.
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Sofia Morales
I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate for answers about my mortgage payoff and property tax situation. It actually did get me through to the IRS in about 20 minutes when I'd previously spent hours getting disconnected. The agent clarified exactly how to handle my situation - turns out I needed to include property taxes from both my 1098 AND my direct payments, but needed to be careful about the escrow refund portion. This saved me from potentially making a significant mistake on my return. Still surprised it worked, but definitely worth it for getting definitive answers directly from the IRS about this confusing mortgage payoff situation.
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StarSailor
Just fyi, most counties have online property tax systems now. After you pay off your mortgage, go to your county tax website and create an account if you don't already have one. You can usually see your full payment history, download receipts for taxes you paid directly, set up email reminders for due dates, and even sign up for paperless billing. I paid off my mortgage last year and was able to download official receipts for my direct property tax payments from my county's website when doing my taxes. No need to request a special form - the payment confirmation has all the info you need for tax filing purposes.
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Dmitry Ivanov
•Do you know if these county records show who made the payment? Like if the mortgage company paid from escrow vs when I paid directly? I'm worried about accidentally double-counting some payments.
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StarSailor
•Yes, in my county's system it clearly shows the source of payment - it displays either the mortgage company name or "homeowner payment" with your name when you make the payment directly. It also shows the payment method (check, online payment, etc). This makes it really easy to see which payments came from your escrow account versus the ones you made yourself after paying off the mortgage. The detailed payment history typically goes back several years, so you can see the transition. Most county tax systems are quite transparent about this to avoid confusion.
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Ava Garcia
Make sure to check if you get an escrow refund when you pay off your mortgage! When I paid mine off, they had collected extra money in my escrow account for future property taxes, and they sent me a refund check about 3 weeks later. This refund is NOT taxable income, but it can complicate your property tax deduction. If part of that refund was for property taxes they collected but hadn't paid yet, you can only deduct property taxes actually paid during the year (either by you or your mortgage company). I made the mistake of deducting the full year's property taxes when part of it was actually refunded to me in that escrow refund. My accountant caught it, thankfully, but it's something to watch out for.
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Miguel Silva
•Good point about the escrow refund! Is there any document that shows exactly what portion of the refund was for property taxes vs. other things like insurance? My mortgage company just sent me a check with no breakdown.
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Javier Torres
•You should contact your mortgage servicer and request a detailed escrow analysis or final escrow statement. They're required to provide this breakdown showing exactly how much was allocated to property taxes, homeowner's insurance, PMI, and any other escrow items. If they don't have a detailed breakdown readily available, ask for your final loan payoff statement - this often includes an escrow account reconciliation that shows the breakdown. You can also check your online mortgage account if it's still accessible, as many servicers keep escrow analysis reports available for download even after payoff. Without this breakdown, you risk either over-deducting or under-deducting your property taxes, which could trigger an audit or cause you to miss legitimate deductions.
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CosmicCruiser
One thing to keep in mind is timing - if you're planning to pay off your mortgage this year, consider the timing strategically for tax purposes. If you pay off in early 2025 before your July property tax payment, you'll be responsible for both property tax payments directly, which means more paperwork but also ensures you have clear documentation for everything you paid. Also, don't forget to save ALL your closing documents when you pay off the mortgage. Your final settlement statement will show any property tax prorations, escrow account balances, and other details that might affect your tax filing. I learned this the hard way when I needed to reference mine months later and had to dig through a pile of paperwork! Your mortgage company should provide you with a final escrow statement showing exactly what property taxes they paid on your behalf during 2025, which will match what appears on your 1098. This makes it easier to reconcile everything when tax time comes.
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