Nolo's Essential Guide to Buying Your First Home (73 page)

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Closing documents.
These serve to prove your ownership of your property, a top priority.

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Loan documents.
Keep all documents associated with your mortgage accessible, as well as documentation of other financial arrangements like promissory notes to family members.

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Inspection reports.
These set a baseline for future comparison. If problems pop up later, they allow you to look back at whether the inspectors predicted them or overlooked something they should have caught.

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Insurance policy.
In a minor or major emergency, you’ll want to know how to contact your insurance company and what you’re covered for. Having the contract handy will make dealing with company representatives much easier at a potentially troubled time.

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Association records.
If your home is governed by a community association, keep all the relevant documents, like the CC&Rs. You’ll want to be able to check on things like whether you can put up a basketball hoop or are really liable for a new fee.

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Interest and points.
The interest you pay on your mortgage or home equity loan is tax-deductible, as are points you paid up front. (For more on these, turn back to Chapter 1.) Your lender will normally send you a post-year-end statement totaling your interest payments, so add these to your files.

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Property tax.
State property taxes are deductible from your federal taxes. Keep a copy of the tax statement you receive, with notes on how you paid it (for example, a personal check number).

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PMI.
Until 2010, PMI is tax-deductible. Keep a copy of your billing statements.

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Charitable contributions.
If you’ve donated to any 501(c)(3) charities, it’s probably tax-deductible. Charities must send you receipts for gifts over certain amounts, but for others, or for cash you plunked anonymously into a donation box, you’ll need to track your donations.

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Home business.
If you work at home, your taxes are going to be more complicated than the average Joe’s, but that also translates into more deductions.

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Purchase documents.
If you’re taking the tax credit available to first-time homebuyers for houses purchased before July 1, 2009, make sure your tax records include documentation to verify the date and amount of the purchase.

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Energy-efficient improvements.
If you make any energy-efficient improvements in 2009 that qualify for the tax credit discussed in Chapter 1, be sure to keep copies of your receipts (and make sure those receipts clearly identify what you purchased).

 

CHECK IT OUT

 

Keep what you’ve earned.
If you’re running a business from your home, learn which deductions you qualify for and which ones you don’t using
Home Business Tax Deductions
, by Stephen Fishman (Nolo).

 

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Other deductible expenses.
To find out more about home-related deductions (for example, moving expenses if you moved because of a job), go to
www.irs.gov
; download IRS Publication 530,
Tax Information for First-Time Homeowners
, and Publication 521,
Moving Expenses
.

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Utility bills.
When you sell your home, many buyers will want to see about two years’ worth of utility bills to see what their average expenses would be. (You can discard the older bills.)

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Professional services.
Careful records of what’s been done, who did it, when, and how much you paid will be helpful in two ways. First, you’ll be able to check whom you used if you want to bring them back (or avoid them). Second, you’ll be able to hand these documents over when you sell your home, so prospective buyers can see what’s been done and hire professionals familiar with the property, if they choose.

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Manuals and warranty information.
Keep all the info you’ll need to replace, return, or otherwise deal with your house’s appliances. Hopefully the seller left you relevant manuals and warranties; most warranties carry over to subsequent homeowners.

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Repair and improvement receipts.
Keep records of and receipts for your repairs and improvements to the house. The distinction between them can be complicated, so for now, you might just want to save everything. When you sell, you can figure out which projects qualify as improvements that lower your capital gains tax liability. IRS Publication 530 (cited above) tells you more and includes a suggested chart for tracking home improvements.

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W-2s and other IRS-related papers.
Keeping track of your income from all sources, whether it’s a salary, royalties, or eBay business, is the first step in preparing to file your taxes. Also track incoming money that might look to the IRS like income, but really wasn’t, like a gift or reimbursement.

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Health insurance records.
In case of emergency, every member of your household should know your and their health insurance information. Also consider creating documents showing who’s authorized to make health care decisions for you if you aren’t able to; see “What You Can Cover in Your Health Care Documents” and related articles in the Wills & Estate Planning section of Nolo’s website,
www.nolo.com
.

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Auto insurance.
Though you should keep a copy of your car registration and current insurance information inside the car itself, you should also keep them on file, in case of loss or theft. Make sure you can easily find the vehicle identification number.

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Hire a tax professional.
A pro can help you take maximum advantage of your brand-new investment and avoid incomplete filings with the IRS.

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Check out additional resources.
In fact, you might want to literally check these out, at the library. See favorite books like
The Complete Tightwad Gazette
, by Amy Dacyczyn (Villard), and
Pinch A Penny Till It Screams
, by Madeline Clive (Lucerna Publishing).

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Eat in more.
You’ve got a new kitchen, so experiment! There are hundreds of great websites (
www.epicurious.com
is one of our favorites). And if you’re really pennypinching, check out
Dining on a Dime: 1000 Money Saving Recipes and Tips
, by Tawra Jean Kellam and Jill Cooper (Newman Marketing), and
The Frugal Family’s Kitchen Book
, by Mary Weber (Cranberry Knoll Publishers LLC). An Internet search for “frugal recipes” will turn up plenty, too.

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Restart your savings.
With all the financial rigmarole you’ve just been through, saving may sound like a pleasant dream. However, careful goal-setting can help you rebuild funds—plenty of millionaires can tell you the benefits of saving just a little at a time.