Homeowner Documents -- Keep for Tax Purposes

• HUD (Housing and Urban Development) Statement
  This is usually a legal-sized document that details the closing costs, taxes, points paid, and other items related to the home purchase, sale, or refinance.

  The expenses listed on the HUD Statement are some of the figures used in calculating capital gain when the home is sold. Many of the closing costs are added to the original purchase price to increase the home basis and thus reduce the amount of gain from sale of the property. Each person is allowed a lifetime exemption of $250,000 on the sale of personal property. This is a total for all personal residential property sold during your lifetime.

  The HUD Statement is also useful when calculating the potential tax deduction available in the year the home is purchased.
• Home improvement receipts (showing sales tax paid)
  Some states do not collect state income tax. In these states, homeowners may be able to get a sales tax credit. Check with your tax preparer to see if this is true in your state and if the credit is can be increased by the sales tax paid on vehicles and building materials purchase for major home renovations.
  
  If you live in a state that does not claim income tax and received this credit on a former tax return, these receipts should be kept with the appropriate tax return for at least 3 years.

  When keeping receipts, re-write the date and total in pen as receipts often fade over time.
• Cost of home improvements (for figuring gain on sale of home)
  When selling a home, the difference between basis of the property (the buying price) and selling price determines the amount of gain. Cost for home improvements will increase the basis and thereby reduce the gain and potential tax during the year of sale.
• Form 1098
  The Form 1098 is a tax document generated by your mortgage company each year. It shows the total mortgage interest paid (including point paid on a new home purchase.) The 1098 may include amount paid for property tax, but not always. These figures are used in calculating the Itemized Deduction (Schedule A) amount to determine if it exceeds the Standard Deduction.
• Points paid during a home refinance

  This figure is available on the final HUD Statement generated at a refinance closing.

  If you paid a [percentage] point to lower the interest rate of your loan at a refinance, you can deduct the points in equal amounts over the life of your loan. If you sell or refinance again, the portion not yet deducted on the Schedule A can be claimed in the year you sell or refinance.
• Monthly mortgage statements
  Keeping at least the last monthly mortgage statement of the year is helpful for several reasons: Some mortgage companies record escrow payments (including tax and hazard insurance)on their last monthly statement. It is also good to keep a record of the loan number and contact information for the mortgage company.

  If the mortgage is being sold, be sure to print a current transaction schedule before the account is transferred. You will need a record of the escrow payments, interest payments, points paid on a new home or refinance, and PMI (principle mortgage insurance) paid.
• First-time home-buyer tax credit documentation
  If you received a first-time home-buyer credit because you purchased your home during 2007, 2008, or 2009, be sure to keep these documents for at least 3 years (or longer if the credit is being paid back to the IRS.)
• All household expenses (if using home for business)
  If you use any portion of your home regularly and exclusively for your own business, you should keep a record of all repairs, utilities, maintenance services, and insurance pertaining to the home. These are deductible from the business income based on the percentage of area used.