A house is a capital asset. As such, you will need to calculate a gain or loss upon its sale and, if you made a profit, pay any applicable capital gains taxes. For this reason, it is a good idea to keep records related to the purchase of, improvements to, and sale of a house for as long as you own the home, plus at least six years.
Housing records include your title, deed of purchase, information about the home's purchase price and closing costs, and the cost of capital improvements (e.g., a new fireplace, room addition, or deck). Some financial experts go even further by recommending you hold housing-related paperwork indefinitely.
Doing so provides documentation in the event of tax law changes or other needs. Keep all records related to your home in a file folder separate from your annual tax documentation for itemized deductions, which are normally kept for up to six years. When records are no longer needed, be sure to destroy them with a crosscut shredder to reduce the risk of identity theft.
Under current tax law, taxpayers can exclude up to $250,000 in capital gains ($500,000 if married and filing jointly) when selling a house. To qualify, a homeowner needs to own and live in the property has his or her primary residence for at least two years out of the five years ending on the date of sale
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