I know being organized is a challenge for some, but when it comes to your home, it’s very important to keep detailed records.
When you purchase a house or condo, you’ll be hit with a flurry of paperwork. The Purchase and Sale agreement, various disclosures, inclusions/exclusions forms, your home inspection, the insurance policy, and mounds and mounds of mortgage documentation. Keep all of this. DO NOT throw it away. It will only serve to help you later on when you decide to sell.
Additionally, keep track of improvements and maintenance that you perform on your home. Save invoices and receipts and organize them chronologically, if you can. This history will help your real estate agent understand what value you put into your home and how it affects the listing price. These expenditures also help you calculate your cost basis so you can understand if you have a taxable gain. For a primary residence, there would be a tax if the gain was more than $250,000 for a single homeowner or $500,000 for a couple. A primary residence is defined as property that the owner lives in for at least 2 of the past 5 years. If you keep your receipts, you will be able to prove a higher cost basis, which will lower your capital gain and potentially reduce your tax liability.
Finally, if you have any hazardous/environmental items removed (ie- asbestos, in-ground oil tank, etc.) be sure you have a licensed professional carry out the removal and that all proper documentation has been filed with necessary city and state offices. Additionally, keep disposal reports for your records (these should be provided by the contractor you hired), as these will be VERY important when you sell your home. The next owner will want to insure that everything was removed safely and there will be no negative residual effects from improper removal.
At times keeping records for your home may seem like a tedious chore, but it always pays off when it’s time to sell.