To start, let’s state the obvious: Purchasing your home is one of the largest expenses – if not the largest one – that you’ll ever incur. And with it, comes a wide array of tax implications, from potentially paying capital gains taxes if you have a profit when you sell your home to claiming various tax deductions at the sale as well as along the way.
Another obvious point: You’ll need to retain certain key documents during the course of your home ownership and, for many of the documents, at least seven years after.
Not so obvious: The specific records you need to keep. To help get you started, these tax records include:
While you live in your home:
- Room addition expenses
- Room finishing expenses
- Installation expenses for new roof, fence, fireplace, heating/cooling and plumbing systems
- Expenses for replacing and upgrading appliances, cabinets, and carpeting
- Permanent landscaping expenses
When you are ready to sell (90 days prior to date of sale):
- Painting expenses
- Lawn and tree service expenses
- Expenses for repairing concrete and glass
- Carpet cleaning expenses
- Other needed home repairs
When you sell your home:
- Real estate broker’s fee
- Attorney fees
- Recording expenses
- Title insurance costs
- Loan fee or “points”
- Survey cost
Of course, this list is not exhaustive. We recommend that you talk with your tax lawyer or accountant for guidance on the specific records you should retain. If you need one, we have several preferred CPA’s and tax attorneys on our Jackie’s List. Of course, we’re also available to answer any questions and can help you determine if a specific professional is the best one for you. It’s all part of our mission to help you get the most out of your Evanston-area home, including the best tax advantages with proper deductions that you earned.