Dona DeZube from HouseLogic writes about which tax and home records are important to keep and how long you need them. Check it out!
Unless you’re living in the 123-room Spelling Manor, you probably don’t have space to store massive amounts of tax and insurance paperwork, warranties, and repair receipts related to your home. But you’ll definitely want your paperwork at hand if you have to prove you deserved a tax deduction, file an insurance claim, or figure out if your busted oven is still under warranty.
Except for tax paperwork, there’s no official guideline governing exactly how long you have to keep most home-related documents. Lucky for you, we considered the situations in which you might need documents and came up with a handy “How Long to Keep It” home records checklist.
First, a little background on IRS rules, which informed some of our charts:
Why you need these docs: You use home sale closing documents, receipts for capital improvements, and like-kind exchange records to calculate and document your profit (gain) when you sell your home. Your deed and mortgage payoff statements prove you own your home and have paid off your mortgage, respectively. Your builder’s warranty or contract is important if you file a claim. And sooner or later you’ll need to check the CC&R rules in your condo or community association. If you purchased a home and cannot find your HUD or settlement statement, contact your real estate agent. They may have a copy stored on your behalf. If you are looking to buy or sell a home, please contact me at LAnies@HomeDCMetro.com or 202-409-7513.
Why you need these docs: To document you’re eligible for a deduction or tax credit.
*Energy tax credits for alternative energy sources; credit expires at the end of 2016.
**Tax credits that you carry forward from one year to a future year, such as when you don’t have enough tax liability to offset the entire amount of the credit. (You can’t deduct more than you earn.) Only certain tax credits can be carried forward. Check with your tax pro about your particular circumstances.
Why you need these docs: To file a claim or see what your policy or warranty covers.
Why you need these docs: For the most part, to prove your eligibility to deduct the expense. You’ll also need receipts for capital expenditures to calculate your gain or loss when you sell the property. Landlord’s insurance and partnership agreements are important references.
Why you need these docs: Most are needed to calculate capital gains when you sell. Employment records help prove deductions.
Organizing Your Home Records
Because paper, such as receipts, fades with time and takes up space, consider scanning and storing your documents on a flash drive, an external hard drive, or a cloud-based remote server. Even better, save your documents to at least two of these places.
Digital copies are OK with the IRS as long as they’re identical to the originals and contain all the accurate information that was in the original receipts. You must be able to produce a hard copy if the IRS asks for one.
Tip: Tax season and year’s end are good times to purge files and toss what you no longer need; that’s often when the spirit of organization moves us.
When you do finally toss out your home-related paperwork, use a shredder. Throwing away intact documents with personal financial information puts you at risk for identity theft.
This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice. If you need a referral to a tax professional, please contact me at 202-409-7513 or LAnies@HomeDCMetro.com.
Read more: http://www.houselogic.com/home-advice/taxes-incentives/how-long-to-keep-tax-records/#ixzz3TXSzYWPr
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Dona DeZube has been writing about real estate for more than two decades. She lives in a suburban Baltimore Midcentury modest home on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.
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