How Long to Keep Tax Records: A Checklist

For most tax deductions, you need to keep receipts and documents for at least 3 years.

Unless you live in a Hollywood Hills mansion, you probably don’t have space to store years of tax and insurance paperwork, warranties, and repair receipts related to your home.

But you need that paperwork if you need to prove you deserve the tax deductions you took, to file an insurance claim, or to figure out if your busted oven is still under warranty.

To help you organize your piles of papers, we’ve created a handy checklist of how long to keep tax records.

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.
  • Check with your state about state income tax records. Most states make you keep them as long as the federal government does — three years. But Montana wants you to keep them for five years. And Ohio recommends you hang on to them 10 years. Yes, an entire decade.
  • 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 their gross income. And the agency never closes the door on an audit if it suspects fraud. Just sayin’.

Home Sale Records

HOME SALE RECORDS
Document How Long to Keep It
Home sale closing documents, including closing statement 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
Mortgage payoff statements (certificate of satisfaction or lien release) Forever, just in case a lender says, “Hey, you still owe us money.”

Why you need these docs: You use home sale closing documents and receipts for capital improvements 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

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
Tax returns 3 years from the date you file your return or 2 years from the date you paid the tax, whichever is later

Why you need these docs: To document you’re eligible for a deduction or tax credit.

*These deductions are relevant if you itemize. The standard deduction has been increased, which means fewer people will itemize than have in the past. 

Investment Real Estate Deductions

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
Landlord insurance receipts (canceled check or bank statement showing check was cashed) 3 years after you deduct the expense
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

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 profit (gain) or loss when you sell the property. Landlord’s insurance and partnership agreements are important references.

Miscellaneous Records

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 or spouse owns the home + 3 years
Original owners’ purchase documents (sales contract, deed) for home given to you as a gift As long as you or spouse owns the home + 3 years
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.

 

3 Questions To Ask Before Buying Your 1st Home

 

 

 

 

 

 

 

 

 

 

 

 

The real estate market is constantly changing, so of course DO YOUR RESEARCH! DO NOT jump the gun on this one! Unbiased advice from family and peers may be kind, but you are the only one who knows what your needs are when it comes to buying a home.

WHAT MADE YOU CONSIDER OWNING A HOME?

Forget finances for a minute and focus on what made you consider even buying a home in the first place!

·      Is your family expanding?

·      Does your family feel safe?

·      Is there a STELLAR school system in the area so your children can get the education they deserve?

·      Do you have an unbearable landlord?

WHICH WAY IS THE REAL ESTATE MARKET GOING?

DON’T SLEEP ON YOUR DECISION TOO LONG! Home prices are on the rise! Not only are they on their way back up, but these increases are happening monthly.

Don’t believe us? According to Existing Homes Sales Report from the National Association of Realtors (NAR), the average price of homes in May 2017 went up 5.8% from last year.

If you wait until next year to buy, you might be scrapping for change in the cushions to say the least! Not only will it cost you more to buy, but you will also need to increase your down payment to account for the higher price of the home.

WHAT IS THE MORTGAGE FORECAST?

The initial process of purchasing your home may seem easy and quick, but THERE IS MORE TO IT! The ‘long term cost’ of buying a home WILL haunt you if you buy at the wrong time! Mortgage Bankers Association (MBA), and NAR have projected that mortgage interest rates will DEFINITELY increase over the next twelve months. The smallest increase in mortgage rates can have a huge impact on a home owner.

FINAL THOUGHTS

If you and your family feel it is the right time to buy a home then GO FOR IT! Consider these points when making the final decision.

Don’t forget, this move is FOR YOU!

Advantage Real Estate is here to answer all your questions and guide you in buying/selling your home in Randolph and surrounding counties. Stop by our office in Moberly or give us a call today! 660-263-3393

3 Major Steps To Prepare for a Move

 

 

 

 

 

 

 

 

 

 

 

While there is a lot of excitement that comes with moving into a new home, there can also be a great deal of stress. Packing up your entire life and moving it somewhere else can seem overwhelming, but if you have a plan, it can seem a great deal more manageable. Here are the 3 major steps to take to prepare for a move and reduce the stress that can come with it.

Inventory Your Items

While this can seem like a daunting task, taking an inventory of every item in your home will save you a great deal of stress in the future. Whether you do a move entirely on your own or you hire a moving company, it is very important to have all of your items documented. If you sort your items by room and then document them as such and pack accordingly, you will be able to unpack your items by room into your new home in an organized way, ensuring you aren’t missing any items.

Box It All Up

Once you have inventoried all of your items, you will then begin boxing up what you can. Many hardware and home improvement stores have affordable boxes but checking on local Facebook pages for someone trying to get rid of moving boxes could save you a few dollars. Once you have your boxes, it is key to pack by room. This will help if you follow your inventory list, ensuring every item gets packed. Label your boxes by room to make moving in to your new home a breeze.

Renting a Moving Truck

If you’ve never rented a moving truck before, it can be difficult to guess what size truck you will need to transport all your goods. Thankfully, many sites offer ‘calculators’ that are easy to find with a simple search and allow you to enter your box and furniture information and give you a recommendation on what size will best fit your needs. While packing your stuff up is often something movers want to do on their own to keep track of their items, sometimes hiring movers for the truck portion of the move can take a great deal of weight, both physical and metaphorical, off of your shoulders. By hiring movers to load up your truck, you will save the stress on your body and also gain the experience of movers who have packed trucks before. Many people who have moved recommend hiring movers for the loading and unloading portion of the move, even if you want to do everything else DIY.

Advantage Real Estate can help with all your Real Estate needs in Randolph and surrounding counties whether it’s buying, selling or both! Let us help relieve some of your stress of moving. 

New Year’s Resolutions That Will Help You Buy A Home in 2020

 

 

 

 

 

 

 

 

 

 

 

If 2020 is the year for you to buy a home, consider making these 5 New Year’s resolutions to help you be as prepared as possible to become a homeowner.

1. Cut down on monthly subscriptions.

With each month, there is a new subscription service out there. What starts as convenience turns into an endless list of subscriptions that we often don’t use enough to justify the costs. Sit down and go through your monthly/yearly subscriptions and cancel whatever you don’t use. Set aside that extra money with the rest of your savings so your down payment can continue to grow.

2. Build a better credit history.

Paying bills on time and paying off debts will help create a solid credit history. Make sure you have some utilities or rent in your name so that you can pay them on time and continue to build a solid credit history. 

3. Avoid changing careers.

Alongside income, your employment history will be a major factor during your mortgage application evaluation. While a new job could be a good career move, most evaluators are looking for a steady job history with little to no gaps in your employment over the last few years. 

4. Check your credit.

If you don’t know where your credit is at currently, now is the best time to check. Most credit sites will tell you what is impacting your credit, and you can use those tips to change your choices heading into the new year. If large debts are negatively impacting your credit, get started on a pay off plan so your score can improve in the new year.

5. Avoid large purchases.

Your debt-to-credit ratio makes a major impact on your mortgage approval. If you buy a brand new car or fund a large vacation, that ratio could sway in the wrong direction. If you want your lender to be willing to give you the maximum amount possible, make sure you aren’t making any large purchases heading into the new year. Advantage Real Estate agents can help you with the purchase of your new home in Randolph and surrounding counties in Missouri. Give us a call at our office in Moberly. 660-263-3393