Tax and Home Records Checklist: What to Keep and for How Long?
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:
- The IRS says you should keep tax returns and the paperwork supporting them for at least three years after you file the return — the amount of time the IRS has to audit you. So that’s how long we advise in our charts.
- Check with your state about state income tax, though. Some make you keep tax records a really long time: In Ohio, it’s 10 years.
- The IRS can also ask for records up to six years after a filing if they suspect someone failed to report 25% or more of his gross income. And the agency never closes the door on an audit if it suspects fraud. Just sayin’.
| HOME SALE RECORDS | |
| Document | How Long to Keep It |
| Home sale closing documents, including HUD-1 settlement sheet | As long as you own the property + 3 years |
| Deed to the house | As long as you own the property |
| Builder’s warranty or service contract for new home | Until the warranty period ends |
| Community/condo association covenants, codes, restrictions (CC&Rs) | As long as you own the property |
| Receipts for capital improvements | As long as you own the property + 3 years |
| Section 1031 (like-kind exchange) sale records for both your old and new properties, including HUD-1 settlement sheet | As long as you own the property + 3 years |
| Mortgage payoff statements (certificate of satisfaction or lien release) | Forever, just in case a lender says, “Hey, you still owe money.” |
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.
| ANNUAL TAX DEDUCTIONS | |
| Document | How Long to Keep It |
| Property tax payment (tax bill + canceled check or bank statement showing check was cashed) | 3 years after the due date of the return showing the deduction |
| Year-end mortgage statements | 3 years after the due date of the return showing the deduction |
| PMI payment (monthly bills + canceled check or bank statements showing check was cashed) | 3 years after the due date of the return showing the deduction |
| Residential energy tax credit* receipts | 3 years after the due date of the return on which the credit is claimed (including carryforwards**) |
Why you need these docs: To document you’re eligible for a deduction or tax credit.
*Energy tax credits ($500 lifetime cap) for such things as energy-efficient windows, doors, heating and cooling systems, insulation, and more.
**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.
| INSURANCE AND WARRANTIES | |
| Document | How Long to Keep It |
| Home repair receipts | Until warranty expires |
| Inventory of household possessions | Forever (Remember to make updates.) |
| Homeowners insurance policies | Until you receive the next year’s policy |
| Service contracts and warranties | As long as you have the item being warrantied |
Why you need these docs: To file a claim or see what your policy or warranty covers.
| INVESTMENT (LANDLORD) REAL ESTATE DEDUCTIONS | |
| Document | How Long to Keep It |
| Appraisal or valuation used to calculate depreciation | As long as you own the property + 3 years |
| Receipts for capital expenses, such as an addition or improvements | As long as you own the property + 3 years |
| Receipts for repairs and other expenses | 3 years after the due date of the return showing the deduction |
| Landlord’s insurance payment receipt (canceled check or bank statement showing check was cashed) | 3 years after the due date showing the deduction |
| Landlord’s insurance policy | Until you receive the next year’s policy |
| Partnership or LLC agreements for real estate investments | As long as the partnership or LLC exists + 7 years |
| Landlord insurance receipts (canceled check or bank statement showing check was cashed) | 3 years after you deduct the expense |
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.
| MISCELLANEOUS RECORDS | |
| Document | How Long to Keep It |
| Wills and property trusts | Until updated |
| Date-of-death home value record for inherited home, and any rules for heirs’ use of home | As long as you own the home + 3 years |
| Original owners’ purchase documents (sales contract, deed) for home given to you as a gift | As long as you own the home + 3 year |
| Divorce decree with home sale clause | As long as you or spouse owns the home + 3 years |
| Employment records for live-in help (W-2s, W-4s, pay and benefits statements) | 4 years after you make (or owe) payroll tax payments |
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.
Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.
