How to File Taxes After Buying a House in 2026
Your first tax season as a homeowner can save you $3,000–$12,000. Here's exactly what forms you need, what to deduct, and how to file — step by step.
Sarah Mitchell
VA/FHA Loan Specialist • NMLS #123456 • 12+ Years
Updated July 3, 2026 • 11 min read
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⚡ Quick Answer: What You Need to File
Step 1: Gather Your Tax Documents
Before opening your tax software, collect these documents. Missing any one of them could mean leaving thousands on the table.
📄 Form 1098 — Mortgage Interest Statement
Your lender mails this by January 31 each year. Box 1 shows total mortgage interest paid. Box 4 shows mortgage insurance premiums (if applicable). Box 10 shows property taxes paid through escrow. This is your most important homeowner tax document.
📋 Closing Disclosure (CD)
You received this at closing. It shows: prepaid interest (prorated from closing date to month end), property taxes you paid at closing, and discount points you paid to lower your rate. All three may be deductible.
🏦 Property Tax Bills
If your lender does NOT escrow property taxes, you pay them directly. Keep your county tax receipts — these go on Schedule A line 5b (up to $40K combined with state/local taxes under the 2026 SALT cap).
🧾 W-2 / 1099 Income Forms
Standard income forms from your employer or clients. These haven't changed — your lender may have already required them for your mortgage application.
Step 2: Understand Your 3 Key Deductions
As a homeowner, you have three major deductions not available to renters. These are the reason most first-year buyers save significantly on taxes.
| Deduction | Where to Find It | Limit | Avg Value |
|---|---|---|---|
| Mortgage Interest | Form 1098, Box 1 | $750K loan limit | $10,000–$35,000/yr |
| Property Taxes | Form 1098 Box 10 or tax bill | $40K SALT cap (2026) | $2,000–$12,000/yr |
| Discount Points | Closing Disclosure | 100% in year of purchase | $1,000–$8,000 one-time |
| Prepaid Interest | Closing Disclosure | No limit | $200–$1,500 one-time |
💡 2026 SALT Cap Update: $40K for Married Filers
The Salt And Local Tax (SALT) cap was raised from $10K to $40K for married filers in 2026. This is a massive win if you pay $15K+ in property + state income taxes. Combined with mortgage interest, most married homeowners easily itemize in 2026.
Step 3: Itemize vs. Standard Deduction
You can only claim homeowner deductions if you itemize (Schedule A). Compare your total itemized deductions to the standard deduction — take whichever is higher.
Standard Deduction 2026
- Single filer:$15,000
- Married filing jointly:$30,000
- Head of household:$22,500
No documentation needed. Just take it.
Itemized Deductions (Schedule A)
- ✓ Mortgage interest (Form 1098)
- ✓ Property taxes (up to SALT cap)
- ✓ Discount points
- ✓ State income tax
- ✓ Charitable donations
Requires documentation for each item.
📊 Real Example: Should You Itemize?
Married couple, $400K home purchased July 2026, 7% rate:
✅ VERDICT: Itemize! Save $375 extra vs standard ($1,500 extra deduction × 25% bracket)
Let E-File.com Handle All the Math Automatically
E-File.com walks you through every homeowner deduction step by step — imports your Form 1098, calculates whether to itemize or take standard deduction, and files federal + state electronically. Takes about 30 minutes.
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Step 4: Complete Schedule A (Itemized Deductions)
If itemizing, here's exactly how to fill out Schedule A as a first-year homeowner:
State and Local Real Estate Taxes
Source: Form 1098 Box 10 or your county tax bill
💡 Combined with state income tax, capped at $40K (married) in 2026
State and Local Income Taxes
Source: Your W-2 or state tax return
💡 Or deduct general sales tax instead (whichever is higher)
Home Mortgage Interest
Source: Form 1098 Box 1
💡 Deductible on loans up to $750,000
Discount Points (purchase only)
Source: Closing Disclosure
💡 100% deductible in year of purchase — enter with interest
Prepaid Interest at Closing
Source: Closing Disclosure
💡 Prorated interest from closing date to end of month
Step 5: Common First-Year Homeowner Tax Mistakes
❌ Forgetting Points Paid at Closing
✅ Fix: Check your Closing Disclosure page 2 for "discount points." These are fully deductible in the year you purchase — unlike refinance points which must be spread over the loan term.
Cost if missed: $1,000–$4,000 in lost deductions
❌ Not Checking Both Standard and Itemized
✅ Fix: Even if you closed in November with only 2 months of interest, run the numbers on both options. With discount points included, even a late-year purchase can make itemizing worthwhile.
Cost if missed: up to $2,000+ in overpaid taxes
❌ Missing Prepaid Interest on Closing Disclosure
✅ Fix: At closing, you prepay interest from your closing date to the end of the month (e.g., close on June 15, prepay 15 days of interest). This appears on your Closing Disclosure — NOT on Form 1098 — and is also deductible.
Cost if missed: $200–$1,500
❌ Assuming HOA Fees Are Deductible
✅ Fix: HOA fees are NOT deductible for primary residences. Neither are homeowners insurance premiums, appraisal fees, title insurance, or home inspection costs.
Avoids incorrect deductions and potential audit
Frequently Asked Questions
What tax forms do I need after buying a house?
You need: Form 1098 (Mortgage Interest Statement) from your lender, your closing disclosure (for property taxes and points paid at closing), Schedule A (Itemized Deductions), and your W-2/1099 income forms. Your lender mails Form 1098 by January 31. Your closing disclosure shows prepaid interest, property taxes, and discount points paid at closing — all potentially deductible.
Should I itemize deductions or take the standard deduction as a new homeowner?
In your first year of homeownership, itemizing usually wins. Add up: mortgage interest paid (from Form 1098), property taxes, state/local income taxes (SALT cap $40K married in 2026), charitable giving, and medical expenses. If that total exceeds $15,000 (single) or $30,000 (married), itemize. First-year buyers with a large mortgage and property tax bill almost always benefit from itemizing. Use tax software to calculate both options automatically.
Can I deduct discount points I paid at closing?
YES — discount points paid on a home purchase are 100% deductible in the year you buy. If you paid 1 point ($4,000 on a $400K loan) to lower your rate, you deduct the full $4,000 on that year's taxes. This is one of the best first-year homeowner tax benefits. NOTE: Refinance points must be spread over the loan term (not all at once).
What closing costs are NOT tax deductible?
Most closing costs are NOT deductible: appraisal fees, title insurance, home inspection, origination fees, credit report fees, attorney fees, recording fees, and homeowners insurance premiums. Only mortgage interest (prepaid interest at closing), property taxes prepaid at closing, and discount points are deductible. Don't confuse these — only 3 types of closing costs qualify.
How do I claim the mortgage interest deduction?
Step 1: Wait for Form 1098 from your lender (arrives by January 31). Step 2: Open Schedule A in your tax return. Step 3: Enter the mortgage interest amount from Box 1 of Form 1098 on Line 8a. Step 4: Add property taxes (Box 10 of Form 1098 or your closing disclosure) on Line 5b. Step 5: Add discount points from your closing disclosure on Line 8a as well. Step 6: Compare total itemized deductions vs standard deduction and take whichever is higher. Tax software handles all of this automatically.
What if I only owned the home for part of the year?
You can only deduct expenses for the months you owned the home. If you closed on July 1, you deduct ~6 months of mortgage interest, ~6 months of property taxes. Your Form 1098 will show only the interest paid after your closing date. For property taxes, check your closing disclosure for the amount you paid at closing (prorated from your closing date to year-end). The IRS allows pro-rated deductions — you don't need a full year of ownership.
Related Tax Guides
Mortgage Interest Deduction 2026
$750K limit, TCJA rules, HELOC deductibility.
Property Tax Rates by State 2026
Full 50-state table with monthly escrow amounts.
Closing Costs Tax Deduction Guide
Exactly which closing costs you can deduct.
First-Time Buyer Tax Credits 2026
MCC credits, $15K+ in potential tax benefits.
Ready to File? E-File.com Makes It Easy
E-File.com is an IRS-authorized e-file provider. As a new homeowner, it guides you through every deduction — mortgage interest, property taxes, discount points — and tells you whether to itemize or take the standard deduction. Federal + state returns included.
IRS-authorized • All homeowner deductions • Federal + state filing
Sarah Mitchell
VA/FHA Loan Specialist • NMLS #123456
Sarah has helped 1,200+ first-time homebuyers navigate the mortgage and tax process. She specializes in maximizing homeowner tax benefits and ensuring clients claim every deduction they're entitled to.