Documents you need and what to do with them to file your taxes after you purchase a home

Purchasing a home affects many areas of your life. From your commute to work, where your kids go to school, to where you shop for groceries. Along with those things, there are tax benefits you need to be aware of. Depending on where you live, you may be eligible to deduct your mortgage insurance and property taxes from your income taxes each year.

Tax Documents to Expect from Your Mortgage Lender

Every year by January 31, you can expect a Form 1098 from your mortgage lender/servicer. Form 1098 is a Mortgage Interest Statement that lists the amount of interest you have paid on a mortgage during the tax year. The totals listed on the form can be used to lower your taxable income thus lowering your overall tax bill for the year. Tax Form 1098 that you receive also includes the outstanding principal balance owed on your loan as well as the real estate taxes you paid throughout the year.

How to Determine How Much Interest You Can Deduct from Your Taxes

Form 1098 lists all the mortgage interest you paid on your home loan for the taxable year on line 5. The form is not required to be submitted to the IRS (Internal Revenue Service) when you file your taxes. Only in the event of an audit may you need to present it to the IRS because the mortgage lender sends this same information to the IRS at the same time you are mailed a copy.

Why You Need Your Closing Disclosure to File Your Taxes

There are additional items that may be tax-deductible listed on the Closing Disclosure you received when you closed on your home, based on where you live and how you file your taxes. Items such as interim interest, real estate taxes, mortgage points, and private mortgage insurance could be deductible from your taxes. Fees such as origination fees, attorney fees, and title insurance are not tax-deductible. Please see your tax advisor for more explanation and what you can deduct from your disclosure document.

How to Deduct Mortgage Interest, Points, and Other Fees When Filing Your Taxes

You may be able to claim the amounts listed on Form 1098 and your closing disclosure form by using Form 1040 and Schedule A when filing your taxes. This would mean forfeiting the standard tax deduction for your individual filing status; you can either take the standard deduction or itemize deductions. Consult with your tax advisor to determine which is best for your situation. The amount listed on Form 1098 may be above the amount that you can deduct based on the amount of your loan. You may deduct up to $1,000,000 in mortgage loans ($500,000 if married filing separately); any amount over $1,000,000 is not tax-deductible.

Points are a little different. Points that you pay towards your mortgage can be fully deductible in the year they are paid. They aren’t always reported on Form 1098. If you feel that it should be listed on your Form 1098 but it’s not, contact your mortgage lender.


Every mortgage loan and tax situation is different. This article is intended to prepare you to have the appropriate documents regarding your mortgage on hand when you file your taxes for this year, and what to expect to receive from your mortgage lender. This article is relevant as of December 2019. Purchasing a home is the largest transaction that many of us will ever make, and it's worth consulting with a tax advisor to confirm we are getting the tax benefits of homeownership when possible. Please consult with your tax advisor as to what items can and cannot be deducted from Form 1098 and the Closing Disclosure you received at your closing on your mortgage loan. It's also a good practice to keep all tax documents on hand for at least four years.