Paperwork is normal part of life, school, work and taxes. Owning a home is no different. It’s important that you keep records of anything relating to your home.
- If you need to file a disaster, casualty, or theft loss, you’ll need paperwork.
- If you install energy-efficient appliances, you’ll need the receipts.
- Deducting mortgage interest? You’ll need a Form 1098 or other statement showing how much interest you paid.What Should You Keep?Credit and debit card receipts can be your records for any renovations or upgrades you did to the home. Receipts are also a record for deducting the residential energy credit. If you installed medically required equipment or upgrades, the receipts are supporting documents when deducting the expenses. The receipts are also helpful in valuing property if you file a disaster, casualty, or theft loss.Paperwork for selling a home: Any documents you receive or create while selling your home should be kept. This includes any appraisals, legal paperwork, mortgage documents, and receipts for improvement or repairs.How Long Should You Keep Records?How Should You Store Your Records?No scanner? Do you have a digital camera, cellphone, or other device with a camera? The IRS will accept digital photographs as valid records. Just snap and upload.
- If you have paper documents, at a minimum you should store them in a home fireproof safe. Keep it in a place where you can easily grab it if you need to evacuate your home quickly. Storage outside the home is a good idea, such as in a bank safe deposit box.
- This is the age of the Internet, so we recommend you use the cloud for your record storage. There are lots of options here, such as Google Drive or Dropbox. As your paper documents and important papers come to you, just scan and upload to your storage. And if you receive bank and credit card statements by email, take the time to save those records to your storage.
- The IRS recommends that you keep any records or documents used for deductions or credits at least seven years after filing the return. Keeping the records helps in case of a questionable return or even an audit.
- Rental property records: If you rent your home or a part of your home, it’s a good idea to hang on to any documents for the property. Records such as rental agreements, tenant payments, rental expenses, and any other legal or financial document associated with the property.
- If you used a first or second home to secure a home equity loan for a substantial home improvement project, keep records like receipts for materials or invoices from qualified contractors. The receipts for materials and services support your home interest deduction.
- Bank statements show both when and how much was withdrawn for mortgage payments.
- All of these plus many other tax breaks and advantages require a paper trail, and having a way of keeping records is the first important step.
For help with any income tax question call one of our offices:
Plymouth 734.454.4100, Allen Park 313.388.7180,
Grayling 989.348.4055, Livonia 734-462-6161,
Royal Oak 248.399.7331, or St. Clair Shores 313.371.6600