CHAPTER 8 Navigating Mortgages, Taxes, and Financial Preparedness Buying a home is an exciting milestone, but it also comes with responsibilities that may feel unfamiliar, especially if you’ve been renting. Owning a home brings new experiences—from managing mortgages and taxes to budgeting for maintenance and repairs. Understanding these financial components is essential for a smooth transition into homeownership and long-term stability.
Understanding Mortgage Interest and Tax Deductions
When you purchase a home, certain expenses can be deducted from your federal income taxes, offering significant savings. One of the most valuable deductions is mortgage interest. Many homebuyers overlook how impactful this can be for financial planning. At the end of each year, your lender will provide IRS Form 1098, which shows the amount of mortgage interest you’ve paid. Use this to calculate your deductions and incorporate it into your annual financial plan. However, not all expenses are deductible. Items like home repairs, general closing charges, homeowners’ association dues, and property hazard insurance premiums typically don’t qualify. Familiarize yourself with these distinctions to avoid surprises come tax season.
40
Powered by FlippingBook