Community Champion

Reports and accounting

One method of recording taxes paid by lender from escrow is to first record the escrow part of your mortgage payment monthly posting to a Current Asset account, Escrow for Taxes. Then when the taxes are actually paid (the lender should give you an annual statement at a minimum) you enter a bill, record it paid from a CLEARING account (dummy bank account) and then make a "deposit" into Clearing from Escrow to create a wash.

 

If you choose instead to record the paid taxes with a JE, you will debit Property tax and credit your Escrow account mentioned above.