Homeowner Records: What to Keep and How Long

Keeping full and accurate homeowner records is not only vital for claiming deductions on your tax return, but also for determining the basis or adjusted basis of your home.

Keeping full and accurate homeowner records is not only vital for claiming deductions on your tax return, but also for determining the basis or adjusted basis of your home. These records include your purchase contract and settlement papers if you bought the property, or other objective evidence if you acquired it by gift, inheritance, or similar means. You should also keep any receipts, canceled checks, and similar evidence for improvements or other additions to the basis.

Here are a few examples:

  • Putting an addition on your home
  • Replacing an entire roof
  • Paving your driveway
  • Installing central air conditioning
  • Rewiring your home
  • Assessments for local improvements
  • Amounts spent to restore damaged property

In addition, you should keep track of any decreases to the basis such as:

  • Insurance or other reimbursement for casualty losses
  • Deductible casualty loss not covered by insurance
  • Payment received for easement or right-of-way granted
  • Value of subsidy for energy conservation measure excluded from income
  • Depreciation deduction if home is used for business or rental purposes

How you keep records is up to you, but they must be clear and accurate and must be available to the IRS. You must also keep these records for as long as they are important for the federal tax law.

Keep records that support an item of income or a deduction appearing on a return until the period of limitations for the return runs out. A period of limitations is the limited period of time after which no legal action can be brought.

For assessment of tax, the period of limitations is generally three years from the date you filed the return. When filing a claim for credit or refund, the period of limitations is generally three years from the date you filed the original return or two years from the date you paid the tax, whichever is later. Returns filed before the due date are treated as filed on the due date.

You may need to keep records relating to the basis of property longer than the period of limitations. For example, basis is needed to determine gain on home sale. Any gain on sale of a home is tax-exempt for amounts up to $250,000 ($500,000 for married couples). Basis is also important in figuring casualty loss, on conversion of the home to business use, or where there’s a gift of the home (in this case, it is important to the donee). You should keep these records for as long as needed because they are important in figuring the basis of the property. Generally, this means for as long as you own the property and, after you dispose of it, for the period of limitations that applies to you.

If you have any questions as to what items are to be considered in determining basis, don’t hesitate to call.

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It’s Not Too Late to Check Paycheck Withholding


Did you know that the average tax refund was $2,729 for tax year 2018? While some taxpayers may find it advantageous to get a large tax refund, others may wish to have more of their money show up in their paychecks throughout the year. No matter which preference taxpayers choose, they should remember that they can make adjustments throughout the year that will influence the size of their refund when they file their tax return next spring.

Tax Reform Changes

The Tax Cuts and Jobs Act of 2017 made significant changes that affected almost every taxpayer. Most of these changes took effect in 2018 and you may have noticed it when you filed your on tax return earlier this year.

Many taxpayers ended up receiving refunds on their 2018 tax return that were smaller or larger than expected. Others found they owed additional tax when they filed. To avoid tax surprises like this, taxpayers may need to increase or reduce the amount of tax they have taken out of their pay and should check their paycheck withholding as soon as possible — even if they did one last year.

Typical Taxpayer Filing Scenarios

Simple returns. For taxpayers whose tax situation is less complex, the easiest way to check whether their withholding is correct is to use the IRS Withholding Calculator on IRS.gov, which is designed to help employees make changes based on their individual financial situation.

Complex returns. Taxpayers with more complex tax situations such as married couples who both work, higher-income earners, and those who take certain tax credits or itemize might need to revise their Form W-4, Employee’s Withholding Allowance Certificate, completely to ensure they have the right amount of withholding taken out of their pay. If you’ve been putting this off, it’s not too late to adjust your tax withholding. Please call the office and speak with a tax and accounting professional who will evaluate your particular tax situation and help you determine how much tax you should withhold from your paycheck.

Small business owners or sole proprietors. Taxpayers who owe self-employment tax, individual taxpayers who need to pay the alternative minimum tax, those who owe tax on unearned income from dependents, and anyone with capital gains and dividends should contact the office and speak to a tax and accounting professional as well.

Life changes. Taxpayers should also check their withholding when there are life changes such as marriage or divorce, birth or adoption of a child, retirement, new job or loss of a job, purchase of home, or have filed for Chapter 11 bankruptcy.

Certain life changes might affect a taxpayer’s itemized deductions or tax credits. As such, taxpayers should check their withholding if they experience changes to the following:

  • Medical expenses
  • Taxes
  • Interest expense
  • Gifts to charity
  • Dependent care expenses
  • Education credit
  • Child tax credit
  • Earned income tax credit

Income not subject to withholding. Some taxable income is not subject to withholding. Taxpayers with taxable income not subject to withholding and who also have income from a job may want to adjust the amount of tax their employer withholds from their paycheck. Income that is generally not subject to withholding includes interest and dividends, capital gains, self-employment and gig economy income, and IRA distributions, including certain Roth IRAs.

Help is just a phone call away

If you have any questions about tax withholding, don’t hesitate to call and speak to an accounting professional who can help.


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