Bought a house this year? The tax papers to keep from closing

Buying a home opens only a few deductions, and you claim them on Schedule A (IRS Publication 530). If you itemize, you cannot also take the standard deduction (IRS Publication 530). So the first question for a new owner is whether the itemized total beats the standard amount. In the purchase year, points and a full year of interest can tip the balance.

The only closing costs you can deduct are home mortgage interest and certain real estate taxes (IRS Publication 530). Other fees, such as title charges, recording fees and transfer taxes, are not deductible (IRS Publication 530). You add many of them to the cost of the home instead, and that matters when you sell.

A closing disclosure is the final statement of your loan and purchase costs, signed at settlement. Older or cash deals may use a settlement statement instead. Either way, ask for the final version, not the loan estimate you got at the start.

Points are prepaid interest you pay to get a lower rate on the loan (IRS Topic no. 504). You can deduct them in full the year you pay them when the loan buys your main home and a list of tests is met (IRS Topic no. 504). For example, the points must be figured as a percentage of the loan and show clearly as points on the settlement statement (IRS Topic no. 504). Fees for an appraisal, a notary or mortgage insurance are not points (IRS Topic no. 504).

You must also bring your own funds to closing at least equal to the points (IRS Topic no. 504). Money borrowed from the lender does not count. Your down payment and earnest money do, so keep the wire confirmation or bank statement that shows them.

Property tax for the year is split so that you and the seller each pay for the months you owned the home (IRS Publication 530). Your share is deductible even when the seller paid it at closing and you reimbursed it through the settlement (IRS Publication 530). The proration lines on the closing disclosure show the split, so the preparer needs that page and the next tax bill.

Interest on a loan used to buy your home is deductible up to a debt limit. For loans taken out after December 15, 2017, you can deduct the interest on the first $750,000 of debt, or $375,000 if married filing separately (IRS Publication 936). Keep the loan amount and closing date where the preparer can see them, for example on the promissory note or the closing disclosure.

Your servicer reports the interest on Form 1098, and box 6 shows points paid on the purchase of a main home (Form 1098 instructions). When the loan moves to a new servicer during the year, ask for a Form 1098 from the old one and the new one. The Form 1098 guide explains each box.

Private mortgage insurance (PMI) protects the lender when your down payment is small. So a buyer with a thin down payment is the one who asks about it. Premiums you paid in 2025 give you nothing on that return, because the deduction had expired (IRS Publication 936). PMI you pay in 2026 or later counts as mortgage interest, fading out above $100,000 of adjusted gross income (26 U.S.C. 163).

There is no current federal tax credit for buying a first home. Form 5405 is only for repaying the old first-time homebuyer credit when that home was sold or stopped being your main home (About Form 5405). If a client asks about it, check whether they claimed the credit back in 2008.

Two programs still help first-time buyers. A Mortgage Credit Certificate (MCC) is a certificate from a state or local housing agency that lets you claim a yearly credit for part of your mortgage interest on Form 8396 (IRS Publication 530). You must apply for it before you buy, so it only matters if the agency issued one (IRS Publication 530).

The second is the IRA exception. An IRA withdrawal of up to $10,000 used for a qualified first-time home purchase escapes the 10% additional tax (IRS Topic no. 557). Keep the record of what it paid for with the closing papers. It can still be taxable income, so keep the Form 1099-R and check its distribution code. If the code does not show the exception, you file Form 5329 to claim it (IRS Topic no. 557).

Your prorated property tax joins state income tax under one cap. A buyer who closed in 2025 works with a $40,000 cap, or $20,000 married filing separately (Schedule A instructions). A buyer who closes in 2026 gets $40,400, cut back once modified adjusted gross income passes $505,000 (26 U.S.C. 164(b)(7)). In a purchase year your share covers only the months you owned the home, so it uses less of the cap than a full year will.

Planning a heat pump or solar panels right after the move? Neither home energy credit pays for that work now: both ended with 2025, the improvement credit by in-service date and the clean energy credit by the date installation was completed (IRS FAQs on energy credits under P.L. 119-21). Only a 2025 buyer who finished a job that year keeps those invoices for Form 5695.

Basis is what the home cost you, plus later adjustments, and it sets the gain when you sell (IRS Publication 530). On your closing disclosure, the abstract and legal fees, recording fees, survey, transfer tax and owner’s title policy all go into it (IRS Publication 523). The IRS says to hold those papers until 3 years after the due date of the return for the year you sell (IRS Publication 523).

So the closing disclosure you sign this year may need to survive decades. Scan it with the purchase contract, then add each later improvement invoice to the same folder. From your second year on, the homeowner’s yearly list takes over: escrow, Form 1098 and the SALT cap.

1. Ask the title or escrow company for the final signed closing disclosure.
2. Download every Form 1098 in January, from each servicer that held the loan.
3. Save the first property tax bill and the escrow statement for the year.
4. Add the retirement plan papers if an IRA or plan loan paid for the down payment.
5. File the contract and closing papers in a folder you keep until after a sale.

• IRS Publication 530: Only mortgage interest and certain real estate taxes among closing costs are deductible; property tax is divided between buyer and seller; delinquent taxes and fees go to basis; Mortgage Credit Certificates and Form 8396.
• IRS Publication 936: The $750,000 ($375,000) limit for debt after December 15, 2017; seller-paid points reduce basis; the mortgage insurance premium deduction has expired for 2025.
• IRS Topic no. 504: Tests for deducting points in the year paid, including funds provided at closing and points shown on the settlement statement; fees that are not points.
• Form 1098 instructions: Box 1 reports mortgage interest and box 6 reports points paid on the purchase of a principal residence.
• 26 U.S.C. 163: Qualified mortgage insurance premiums are treated as interest for tax years beginning after December 31, 2025, phased out above $100,000 of adjusted gross income ($50,000 married filing separately).
• About Form 5405: Form 5405 is used to report and repay the first-time homebuyer credit when the home is disposed of or stops being the main home.
• IRS Topic no. 557: IRA distributions up to $10,000 used for a qualified first-time home purchase are excepted from the 10% additional tax; Form 5329 claims an exception not coded on Form 1099-R.
• Schedule A instructions: For 2025 the state and local tax limit is $40,000 ($20,000 married filing separately), reduced above $500,000 of modified AGI but not below $10,000.
• 26 U.S.C. 164(b)(7): For tax years beginning in 2026, the state and local tax limit is $40,400, reduced by 30% of modified AGI over $505,000.
• IRS FAQs on energy credits under P.L. 119-21: The section 25C credit ends for property placed in service after December 31, 2025, and the section 25D credit for expenditures after that date; a 25D expenditure is made when installation is completed.
• IRS Publication 523: Closing costs that can be added to basis, and records kept until 3 years after the due date of the return for the year of sale.