How long should I keep my closing records?
The IRS recommends holding onto your closing records for at least three years from the date you filed your initial return after buying the home, but it’s a good idea to keep them for the entirety of the time you own the home and for three years after you sell. These documents can help you determine your house’s cost basis and calculate capital gains.
What documents related to closing should I keep?
After closing on your home, keep the following documents:
- Closing disclosure or settlement statement: Your closing disclosure details key points about your property’s purchase, including mortgage points, prepaid interest that may be eligible for a deduction, property taxes, and settlement costs, such as title fees.
- Form 1098-Mortgage Interest Statement: If you paid at least $600 in reportable mortgage interest during the year, the lender will send you a Form 1098. This form shows how much mortgage interest you paid for the tax year and may also include deductible points and property taxes that you paid through escrow.
- Property tax statements: Save copies of your property tax statements and proof of payments, including escrow statements.
- Proof of home purchase price: Your purchase contract and settlement statement include the home’s purchase price. You can use this document as the basis of the home’s value.
- Receipts for improvements: If you complete major renovations, like a new roof or installing an addition to the property, keep copies of contractor invoices, contracts, and permits. These renovations can affect your home’s cost basis.
What forms do I need to complete as a new homeowner?
Buying a home doesn’t necessarily mean you have more forms to complete at tax time. However, there are a few exceptions:
- Form 1040 (Schedule A): If you itemize your deductions, eligible mortgage interest, points, and property taxes are reported on Schedule A (Form 1040).
- Form 8829 (Expenses for Business Use of Home): If you’re self-employed and use a portion of your home for business use, use Form 8829 to deduct qualifying business expenses if you are using actual expenses versus the simplified method.
