If there’s one thing homeowners know, it’s that there will never be a shortage of paperwork. Contracts, receipts, files and records pertaining to buying, improving and selling a home stack up over the years, and knowing which to keep and for how long isn’t always obvious.
Knowing which tax records to keep (and for how long) can help save you money and headaches over time. GOBankingRates breaks down what you need to know about tax records if you own a house.
What Does IRS Rules Say?
Per the IRS, most homeowners should keep tax returns and supporting documents for at least three years after filing — that’s how long the IRS has to audit a return, or for you to file an amended return claiming a credit or refund.
That three-year window includes items directly related to your home, such as year-end mortgage interest statements (or Form 1098), property tax records and receipts for deductible home improvements. Making sure these are saved and organized can make your tax season far easier, per Kiplinger.
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That said, the IRS can investigate your records as far back as six years if they suspect you’ve underreported your income by 25% — meaning that if you can, holding onto your records for even longer than three years is advisable. Moreover, you should keep documents that impact your home’s tax basis for as long as you own the property, and even beyond that.
According to the IRS, settlement statements, renovation receipts and closing documents can reduce your capital gains tax when you sale. You’d be well advised to hang onto those records for at least three years after you sell your house.
Knowing which tax records to keep, and for how long, can not only make your home ownership a breeze, but your annual tax season, as well. As with all things tax-related, knowing the rules can a make a homeowner’s life far, far easier.
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This article originally appeared on GOBankingRates.com: Here’s How Long You Should Keep Tax Records If You Own a Home
