Housing paperwork can pile up at tax time - here's what to keep, and for how long
By Harvey S. Jacobs
Friday, March 18, 2011; 7:40 PMMany taxpayers are preparing for their annual battle with IRS form 1040 by gathering up all their documents, statements, checks and other assorted papers. At the end of this process, taxpayers are often left with piles of neatly sorted, tabulated and cross-indexed piles. From a homeowner's perspective just what documents do you need to keep, and for how long?
At the risk of incurring the wrath of those followers of the maxim "When in doubt, throw it out," there are certain documents you should never throw out and certain documents to hold for six, three or even as short as one year. Among them are the documents you received at your settlement.
Yes, I know that pile of papers now exceeds 100 pages. Many settlement attorneys are now providing digital copies of those documents in addition to, or in place of, paper. If offered that digital option, take it. Copies are fine; there is almost no reason the homeowner would need the original documents.
The essential documents are your HUD-1 settlement statement, the promissory note, the deed of trust (mortgage), the truth-in-lending disclosure and the deed.
The HUD-1 settlement statement identifies your cost basis (purchase price) and those settlement costs that are added to your cost basis when calculating capital gains or losses upon sale. Examples of settlement costs that get added to your cost basis include legal fees for preparation of the sales contract and deed, title search fees, recording fees, transfer taxes, surveys, owner's title insurance premiums, and any amounts that seller owed but that you, as buyer, agreed to pay.
Yes, I know that pile of papers now exceeds 100 pages. Many settlement attorneys are now providing digital copies of those documents in addition to, or in place of, paper. If offered that digital option, take it. Copies are fine; there is almost no reason the homeowner would need the original documents.
The essential documents are your HUD-1 settlement statement, the promissory note, the deed of trust (mortgage), the truth-in-lending disclosure and the deed.
The HUD-1 settlement statement identifies your cost basis (purchase price) and those settlement costs that are added to your cost basis when calculating capital gains or losses upon sale. Examples of settlement costs that get added to your cost basis include legal fees for preparation of the sales contract and deed, title search fees, recording fees, transfer taxes, surveys, owner's title insurance premiums, and any amounts that seller owed but that you, as buyer, agreed to pay.
