I Bought a Home: What Documents Will I Need for Taxes?

Kristina Hubbard, CMA, Branch Manager / Sr. Mortgage Advisor

February 7, 2024 — 5 min read

Beyond offering independence, privacy, self-sufficiency, and stability, your first home sets the stage for future financial security, freedom, and flexibility.

But what about filing taxes after buying a house for the first time? Sure, you have a little more time before they’re technically due, but the sooner you file, the faster the refunds come!

Settling up with the Internal Revenue Service (IRS) doesn’t have to be a frantic search. Knowing which documents to have on hand and why is safe and easy with the financial habits and guidance by your side.

Statements Mailed at the Start of the Year

Most documents necessary to record your reported income, interest, and withheld taxes will arrive in your mailbox in January or early February. Investment-related 1099s, in particular, tend to be delivered in February.

While certain documents—your W-2, for instance— may be sent through the post office, notifications announcing these documents may come via email, so be sure to keep an eye out and double-check spam folders.

Financial entities, such as a bank or PacRes Mortgage, often post those important 1099 forms to an online account. To stay organized, it may be a good idea to create an email tax folder.

If you recently bought a house or are planning to in the next year, here are mortgage-specific documents you may need:

Mortgage Interest Statement (1098). This statement details the interest amount paid on your mortgage throughout the year. If you're itemizing deductions and claiming this interest as a deduction from your taxable income, you'll rely on it form as evidence of your payments.

Closing Statement. Your closing statement is important if you bought a home in the last year. Beyond mortgage interest, you have the option to deduct points or interest paid during the closing, offering a potential reduction in the taxes you'll be required to pay on annual returns.

Property Tax Statement. It's worth noting that property taxes are deductible. Despite their usual appearance on 1098 forms and closing statements, there's a potential scenario where they might not be mentioned, particularly if you opted out of an escrow account. Connect with your neighborhood Mortgage Advisor to learn more.

Manage Paperless Records as They Arrive

In many cases, paperless banking has relegated physical receipts obsolete, with online statements now serving as repositories for backup records. These digital statements include information for potential deductions, such as charitable donations, healthcare expenses, auto and property tax expenses, and details on gambling winnings and losses.

Start early and dedicate a few extra minutes each month to recording and organizing tax-related information, including:

Expense title
Check numbers
Payee names
Dollar amounts
Dates

Create a spreadsheet dedicated to tax records. You may also want to download and print online documents throughout the year, especially those with limited availability. This will ensure you have records readily accessible when needed.

Keep Deductions in Mind Throughout the Year

Did you know that some driving trips could contribute to tax deductions? Maintain a mileage log in your car to record distances traveled for volunteering, work-related activities, and business or medical appointments. Additionally, you may want to keep track of expenses like parking fees, bus and taxi fares, and tolls, as these can also help you qualify for tax savings.

Hold on to cash receipts that document transportation costs, charitable work, or other tax-deductible activities, even if you’re not sure they’re relevant. It's better to have too much information on hand than not enough, especially when it comes time to file your taxes.

Keep Life Events in Mind Throughout the Year

Did any big life events occur this year? Safeguard documents tied to significant life milestones, including records for marriage, the passing of a spouse, divorce, deductible alimony payments, adoption papers, and child custody agreements.

The arrival of a newborn brings joy and potential tax advantages.

When preparing your tax return, keep documents related to dependent children readily accessible, including their Social Security card, childcare receipts, and contributions to college savings plans.

For new homeowners, a home purchase opens doors to tax-saving opportunities.

Preserve important documents, such as closing documents, invoices, and receipts for home improvements, along with proof of payment. Retain your annual mortgage statement and remember to keep closing documents in case you paid real estate taxes or points during the closing that may not appear on your year-end mortgage interest statement. Specific home improvements, like wheelchair ramps recommended by a doctor, may be deductible as medical expenses if you itemize deductions. Additionally, certain energy-efficient upgrades can help lower your tax liability.

Keep a Record of Past Years’ Filings

The significance of a tax return extends beyond the filing date, as you may need this document for things like securing a mortgage, applying for student loans, or checking the status of your refund through the IRS's "Where's My Refund?" webpage.

While the standard IRS audit window spans three years after the filing date, it can extend further in specific cases. The IRS has the authority to audit you for as many years as necessary if it suspects fraud. To safeguard yourself, retain copies of your return and supporting documents for at least seven to 10 years.