HOW LONG DO I HAVE TO KEEP THIS STUFF?
Are you looking at all those paper files and feeling like you’re being over run and out of room to keep them? Especially if you think you may actually never need those files! How long do you really need to keep important documents and receipts? The answer is, it depends.
HEIRARCHY OF RECEIPTS AND DOCUMENTS
The paper receipt you get from your fast-food lunch may go directly into the trash. Although, you may want to keep it to reconcile it with your monthly statement and then throw it out. The natural hierarchy with receipts and documents associated with purchases is that as the price or value goes up, the more important it is to keep.
THE QUESTION IS…FOR HOW LONG?
IRS recommends keeping records for three years from the date the taxpayer files their original return or two years from the date the tax was paid, whichever is later. But no time limit in the case of fraud or failure to file.
TIME TABLE FOR KEEPING RECORDS
The following table is a guideline how long you should keep certain documents related to your home according to tax professionals best practices.
|Document||Length of time to keep|
|Home Purchase/Sale Documents|
|Home purchase documents||Duration of ownership + 3 years|
|Closing doc’s & statements||Duration of ownership + 3 years|
|Deed to property||Duration of ownership|
|Home warranty or service contract||Until expiration|
|HOA Documents||Duration of ownership|
|Receipts for capital improvements||Duration of ownership + 3 years|
|Mortgage Payoff or Release of Lien||Forever, in case proof is needed|
|Annual Tax Deductions|
|Property tax statement & cancelled check||3 years after IRS due date for return|
|Year-end mortgage statements||3 years after IRS due date for return|
|Federal tax returns||3 years after filing return or
2 years after paying tax, whichever is later
|Insurance and Warranties|
|Home Inventory||Keep current|
|Homeowners insurance policy||Until the replacement is received|
|Service contracts and warranties||Until warranty/service contract expiration|
|Home repair receipts||Until warranty/service contract expiration|
Going digital with your records can make them easy to keep AND easier to find when you need them. Make sure you have an auto back up system; either on an external drive or to the cloud like Dropbox, Google Docs or OneDrive so if something happens to your computer, you have them safely tucked away.
123 MAIN STREET
Create a main folder on your Computer; it could be the address of your home, then create subfolders for Purchase Documents, Home Improvements, Warranties, etc.
When you receive statements that are already in digital format, simply move them to the correct folder and subfolder. If it’s in paper format, scan and save it as a pdf, then save it in the proper folder so you’ll have the record when you need it.
How long you need to retain important documents and receipts depends on what they are. Generally speaking, the higher the cost or value, the more important the document is and the longer you’ll need to keep them. The best thing you can do is convert paper files to digital – it may take some time, but it will be well worth the time invested.
Want more information about selling your home in the Desert? Shoot us an email, we’re here to help. Cathi@DesertAreaHomeFinder.com