How long should I keep purchase and sale documents of my residence

[jskouberdis]

Hello Community,

I have a question which is partially legal and partially tax related.  I bought a house in 1980 and sold it in 1992.  Do I have to keep the purchase and sales documents anymore for this property.  My attorney said no and I agree with her since it is far down the road.

I also bought a house in 1991 and sold it in 2023.  My attorney told me I can shred these documents.  I am not so sure about that.  My thinking is that I should keep both sets of documents until at least 2030 because I reported the sale on my tax return.  I had a $225,000 gain exclusion which was under the $250,000 for a single person.  My thinking is this could still be questioned by the IRS.

Also I bought a condominium in 2023.  On this one I definitely need to keep the purchase agreement so I can calculated any gain or loss upon sale.

What does the community think about the house documents for houses 1 and 2.

Thanks,

John Skouberdis

[George4Tacks]

Generally the audit period is 2 years, but the state may be longer. Using this logic, I would say keep the records 3 years, minimum. You should have also kept the documentation for any improvements to the home(s). 

Digitizing has become pretty easy and disc space is pretty cheap. I would be inclined to scan the docs and keep the digital versions, just for my personal peach of mind. I sold a commercial rental a couple of years ago, on installment sale. I need to keep my records until the payoff plus 2 years. ALL of the rental activity and the purchase, improvement and sale takes up 1.12 GB of disc space. I can get a 10 pack of 2GB memory sticks for $20 on Amazon.

[jskouberdis]

George4Tacks

I always thought the audit period was 3 years and if something is handled wrong they can go back another 3 years and the rule of thumb was keep things for 7 years.  But anyway you agree that the house I sold in 1992 I can shred away.

John

[rcooley25]

If they suspect fraud  there is no statue of limitations but unless they suspect fraud after three years you can breathe easy.

However I always advised my clients to keep records for 4 years    because if you are audited for 3 years ago sometimes there is something in that 4th year that will have to be shown.