How Long To Keep Your Records After Selling the House?

At a high level, make sure you’ve got proof of any mortgage payoffs

Aside from what you’ll need for your taxes (we’ll get to those shortly), you don’t have to hold on to every record associated with a property indefinitely once you no longer own it.

However, you’ll definitely want to keep proof of any loans, mortgages (also called deeds of trust), and deeds in your name that have been paid off and recorded among the land records in the state or county where the property was sold.

A “release” or “certificate of satisfaction,” indicating that the paid mortgage was recorded properly, will suffice. Keeping a payoff statement or lien release also guards against any errors on your credit report or on the lender’s end.

Which other home sale documents should you hang onto?

When listing your house, it helps to think like a buyer in terms of paperwork. Beard jokes that she’s become known in the Asheville area for making her buyers a binder.

“I think I’m one of the only agents who does this,” she shares. The binder is complete with tabbed sections for the appraisal, home inspection, and so forth.

“It’s such an easy reference when it’s all in one place,” she said. “If I sell somebody a house and then three years later, they call me to list, I know we have those records. But it’s surprising how many people will call me to list the house, and I’ll be like, ‘Do you have all the information from when you bought it?’ And they say, ‘No.’”

If you were to create a home sale binder, it’d be smart to include your:

Settlement (closing) statement
As a seller, your most vital document is the closing statement, also called a settlement statement. Some agents also refer to this as an “ALTA,” because the American Land Title Association developed the form that’s widely used.

This statement, often used alongside the Closing Disclosure, summarizes the finances of the transaction, itemizes fees and credits, and shows a seller’s net profits, which you might need for taxes.

Receipts for capital improvements
Although you won’t need your preliminary title report or homeowners insurance records once you sell, you’ll want to keep receipts for capital improvements, such as a kitchen or bath remodel before you sell the home. This isn’t regular maintenance or repair but improvements that boost the home’s value.

Capital improvements mitigate the capital gains taxes you’ll owe on the home sale, which is easier to calculate if you have records of all such improvements over your ownership of the property.

You should be able to keep receipts for the following improvements:

• Renovations and additions: New rooms, decks, or a finished basement boost home value.
• Major repairs and upgrades: Roof replacements, new HVAC systems, or updated plumbing qualify.
• Energy-efficient improvements: Solar panels or energy-efficient windows might come with tax benefits.

Toss receipts for minor repairs, but keep these until at least three years after selling.

Renovation permits
Beard also recommends keeping copies of records where the new homeowner might encounter a legal problem. This includes any permits you pulled for renovations before you sold. If someone does a certain amount of renovations without permits, the next buyer could be held liable retroactively for non-permitted work found during a later inspection.

“That’s a big issue with us right now. I’m sure it probably is nationwide,” she said. “It’s imperative to keep all that information.”

Home warranties
Likewise, keep any warranties for pest control, building improvements, roofing work, appliances (built-in washer/dryer, water heater, refrigerator, HVAC system), and service contracts, for the life of the warranty, even if you sell the home before the warranty expires.

Although many documents are relatively available online, Beard also suggests keeping copies of any records unique to your former home to field any immediate questions or potential issues from the new owners.

“I live in a 1949 house—there’s a fireproof safe cemented to the floor in the garage,” she said. If she were to sell the house, she’d pass on not only records of replacing the roof and the windows but information about the safe as well.

What you’ll need specifically for taxes and calculating capital gains

A certified public accountant is one professional you’ll want in your corner after selling your home to answer detailed questions about your particular home sale. Not every homeowner has to pay federal taxes after selling a home.

Single tax filers can exclude up to $250,000 of profit, and married filers can exclude up to $500,000, according to the Internal Revenue Service (IRS). You qualify for this exclusion by proving that you owned and used your home for at least two out of the five years prior to its sale.

In general, to calculate your tax liability, you’ll need proof of your original purchase price and the sales price (available on the closing statement). Calculating any capital improvements you made to your home throughout the years will lower the amount of capital gains tax you’ll pay on the sale.

For these calculations, hold on to these documents:

• Closing statement
• Documentation that proves your home was your primary residence for at least two of the prior five years, such as utility bills, voter registration, and prior tax returns
• 1099-S form from the IRS, especially if you don’t qualify for capital gains tax exclusions
• 1098 form, which shows your paid mortgage interest, plus any real estate taxes paid through escrow
• Records and receipts that provide evidence of capital improvements, including any invoices to a contractor for remodeling
• Receipts for any moving expenses, as this can reduce your home sale profits if you meet certain rules, such as selling the home because of a new job that’s at least 50 miles farther from your old one.

Financial experts recommend keeping these records for seven years after your home sale, in consideration of the IRS’s time frame for audits. The IRS has three years to audit your return if it suspects any good-faith errors on your part, and six years if it thinks you underreported your income by at least 25%. Do note that you can be audited at any point if the IRS suspects fraud.

Find an Agent to Help You Navigate the Paperwork

Buying and selling real estate is a complex task. A top real estate agent can serve as an invaluable transaction coordinator during steps like the title search and deed transfer.

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Best practices for storing your home sale records

With today’s technology, you can scan any pertinent records and receipts into cloud storage and keep a paper binder if you choose.

“Just start a Dropbox file and dump everything in there,” Beard said. If you don’t have a scanner, take a smartphone photo of the receipt and upload it.

Cloud storage such as Dropbox, IDrive, pCloud, MediaFire, OneDrive, Google Drive, and iCloud backs up automatically and is password-protected, so any computer crash at home won’t affect your records. You also can access cloud storage from anywhere in the world. Just make sure that anyone who needs access to these records has the correct login.

If you also keep a binder of paperwork, label it clearly and store it in a safe place, such as a fire-safe box or a bank box. Photocopy any register receipts so they’ll last longer. Most register receipts are printed on thermal paper, which is susceptible to UV light and heat that it fades over time. A photocopy won’t, so you can toss the originals.

Start your record-keeping right when you buy your house, and you’ll find that selling it and culling through unnecessary paperwork later becomes much easier.

Beard says she’s so meticulous that her organizational tactics rub off on clients. And even if you don’t plan to sell right away, you’d be wise to keep your records tidy as you go: “I train my folks from the very beginning,” she said, noting, “Just trust me. You are going to thank me years from now when you want to sell.”

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