10 New Homeownership Dos and Don’ts: Where CPAs Can Help

by Marc Demetriou, CLC, ChFC, CDLP, Guaranteed Rate Inc. | September 16, 2022

If a client is going from renting to owning a home or vacation property, I’ve got news for them — all those things their landlord used to take care of are their problems now. As their trusted advisor, CPAs need to remind clients that buying a home, after all, is most likely one of the largest financial transactions in their life. For this reason, they need to understand the tax implications as well as the home-related tax deductions that come with owning a home or vacation property. And they also need to understand how everyday decisions can impact their budget and financial situation.   

Here are 10 homeownership dos and don’ts that CPAs should remind clients of (though this list could be much longer, we’re going to limit it to the top 10):

  1. Get to know the neighbors. The best thing your client can do both in the short- and long-term is to get to know their neighbors. They will become priceless sources of local information, helping them find the necessary services and products in their new neighborhood. They may even know things about their home from the previous owner that could save them time and money.
  2. Don’t spend too much to immediate improvements. It’s incredibly tempting when buying a new home to invest in improvements right away and really make the home one’s own. Clients should resist this temptation. They’ve just spent a large portion of their life savings to buy the home and move in, so money is probably pretty tight right now. On top of that, they’re still getting used to all the monthly expenses that come from owning a home.
  3. Get all the necessary insurance.  Lenders require homeowners insurance in order to finance the loan, but that’s not the only type of insurance they should get. If you’re sharing the home with someone who depends on their income to pay for the mortgage, like a spouse or family members, they should get life insurance. That way the mortgage will be covered should something happen. For the same reason, disability-income insurance is a smart investment.
  4. Learn about important maintenance. We’ve already said it a couple of times, but they’re in charge of taking care of their property now, not their landlord. And while we’ve already warned them about spending too much to improve their home, there’s one area that should never be skimped on — maintenance. They will need to know about appliances and mechanicals, especially their HVAC system and hot water heater.
  5. Find a reliable home improvement specialist. Homeowners need to find contractors and handymen to help them take care of their investment. A reliable handyman is worth their weight in gold. This is where getting to know the neighbors comes in. Ask them for recommendations. And don’t try to repair something that’s above one’s skill level.
  6. Organize all warranties and manuals. Go find that folder with information about troubleshooting and repairs for appliances that came with the house, as well as warranty information. If something goes wrong with these big-ticket items, these documents are the first place to look. It’s also a great idea to scan digital versions of these documents.
  7. Change the locks.  No one knows who has a copy of a new home key when homeowners first move in — and no one wants to find out the hard way. Call a locksmith and have them change the locks.
  8. Replace the air filters. A new HVAC system requires a little bit of yearly maintenance, and when someone moves in is a great time to get started. Find out what kind of filter an HVAC needs and where it should go. Make the trip to the local hardware store or home center and purchase a few years’ worth of filters. Once the filters are inserted, set a reminder to replace them again in six months.
  9. Keep your receipts. Once homeowners have settled in and gotten used to the monthly budget, they’ll likely to decide at some point to invest in some upgrades. As improvements are made, hold onto the receipts. Later on when a home is sold, the owners may be subject to taxes on a portion of their profits. But if homeowners save the receipts from the improvements, they may be able to reduce the amount they’ll have to pay in taxes on the sale. They can work with their CPA to find out if they’re eligible for savings.
  10. Find a good tax professional. Remind clients that owning a home has many benefits when tax time rolls around, but it’s likely they’ll need an expert (you!) to help take advantage of all of them.

CPAs can provide the necessary guidance related to homeowners’ monthly budgets. Having all the information at hand related to expenses, interest deductions, available tax credits and overall financial outlay will help first-time buyers be better prepared.

Marc C. Demetriou

Marc C. Demetriou

Marc Demetriou, CLC, ChFC, CDLP, is the senior vice president of mortgage lending and the branch manager at Guaranteed Rate Inc., an NJCPA member benefit provider.

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