Keeping organized records straight from the outset of a new home acquisition is vital not only for peace of mind, it also makes financial transactions a breeze when everything is sorted, filed and at your fingertips. Start your record-keeping right when you buy your house so if or when you sell your home you’ll be prepared with the necessary paperwork. This will also come in handy for any refinancing or auditing needs that might come along in the interim. Below is a handy guide to how to organize your documents.
Create a home sale binder:
Having everything ready and in one location is a time and sanity saver.
Make sure that all homeowners know where the binder is kept.
Documents to store within the binder include:
o Closing Statement summarizing the transaction fees, credits and seller’s net profits
o Receipts for capital improvements.
o Any permits pulled for improvements
o Any permits pulled for renovations
o Warranties and service contracts
o Info regarding any unique features of your home
o Proof of any loans, mortgages and deeds in your name that have been paid off and recorded.
o Payoff statement or lien release for paid mortgage
What you will need if you sell your home for taxes and calculating capital gains:
• The closing statement
• Proof your home was your primary residence for at least two years
• 1099-S form from the IRS
• A1098 form showing your paid mortgage interest and any real estate taxes paid through escrow
• Receipts for any moving expenses.
How long to keep your records?
• Financial experts recommend you keep your records for 7 years after your home sale.
How to store your records?
• Scan to Cloud Storage that backs-up automatically and is password-protected
• Label your paperwork binder clearly and store in a safe place
• Photocopy any register receipts so they last longer.
• Most register receipts fade over time, a photocopy won’t (toss the originals.)
Taking a few short hours in the early days of home ownership to compile these essential documents into one easy to find and clearly labelled binder will save new homeowners hours of work and frustration in the long run over the life of living on the property. The value it brings is all but priceless.