Saving Your Tax Records
As you start your spring cleaning, don't pitch those old tax records just yet.
As a general rule, tax records should be kept at least three years. But receipts and records that relate to the basis of a home should be kept from the purchase of your home until it's sold. That's because the profit of a home sale is tied into the basis of the home.
The settlement papers that should be saved for tax purposes
include any that show the expenses relating to the costs of buying or selling the homes, including fees and commissions, the sales contract and points. These costs either add to the basis of the new home or reduce the taxable profits from the old.
Other important receipts are those for capital improvements,
which add to the basis-or cost-of the property. Contracts and receipts for improvements such as renovating a kitchen or bath should be saved.