Knowing how long to keep real estate records around may be confusing for many individuals. This is true whether you are running a real estate agency or you are trying to determine which of your records from the home-buying process to keep.
It’s important to know which records to keep around and which you can do without to ensure you are protected in the case that a certain document is requested. Our article gives you more information on why it’s important to keep your real estate records, which types of real estate records you may need, and how long you should keep your real estate records.
Why Is It Important to Keep Your Real Estate Records?
Keeping your real estate records is important no matter if you are running a real estate agency, you have just bought a home, or you are purchasing properties with the intent of renting them out to others.
Making sure you have the right documents on hand means you don’t need to scramble when you need them. One of the fastest ways to access these public records is to perform a reverse search on a specific address to find the information you require. Our recommendation for this is to use the reverse address lookup on Information.com. Their database spans every state, and is incredibly up to date, so you’ll only have to perform one quick lookup to get all the paperwork you need. When you have all the right documents organized and easily on hand, you will always have the important documents you need available.
Additionally, in the case of tax issues or IRS auditing, you will need to make sure you have specific real estate records and documents saved so you can provide evidence that backs up your filed taxes and stops future tax issues from occurring.
The Types of Real Estate Records You May Need
When it comes to real estate records, there are several different types of records that you may need to keep an eye on. Below, we list types of documents that homeowners should make sure they have on hand and documents that individuals running real estate individuals should have on hand to prevent tax issues or other lost information problems.
Documents for Homeowners to Keep
Homeowners should keep the following documents on hand while they own or live on a specific property.
- Property deeds
- Home inspection reports
- Capital improvement receipts or invoices
- Condo or homeowner’s association codes and restrictions
- Service contracts, home warranties, and homeowner’s insurance policies (these should be maintained until warranties or contracts expire and regularly updated with new contracts or warranties)
- Records of paid mortgages including lien releases
- Closing disclosure statements, when applicable
- Tax returns (up to three years worth is recommended)
- Property tax payments
- Tax forms such as 1098, mortgage interest statements, and 1099-S, proceeds from real estate transactions
- Proof of the property being your primary residence (such as utility bills and voter registrations), when applicable
- Tenant lease agreements and insurance policies
- Partnership or LLC agreements for real estate investments when applicable
- Original sales contracts and deeds for homes received as gifts
- Fair market value for inherited properties
- Divorce decrees that contain a home sale clause
- Wills and property trusts
Additionally, real estate professionals or agencies should keep the following records on hand at all times:
- Accounting records
- Employment records, including hiring and firing records
- Legal records and contracts
- Sales and property records
Of course, this isn’t an exhaustive list of all of the real estate records that you might need or have possession of. In most cases, you should store important records first and perform research on the document to determine if you need to save it in the long term to avoid accidentally getting rid of important and helpful documents.
How Long Should I Keep Real Estate Records?
Some real estate records need to be kept indefinitely, for as long as you own or live on a property, and others are fine to be disposed of after a set number of years. When it comes to the IRS and tax documents, you should be keeping at least three years’ worth of these items. You will also want to update old records, such as homeowner’s insurance policies that have expired, with newer versions, disposing of the old records.
Most property ownership records, accounting, and legal records should be kept indefinitely, as should documents pertaining to inherited homes, LLCs and partnerships, and tenant or leasing agreements.
Is Digital Storage Acceptable?
Many individuals prefer to use digital storage for their important records, and this is a popular practice in today’s digital age. If you properly scan your documents and upload them to a dedicated file, it can be a lot easier to organize and access documents that might even be years old.
Make sure that if you are storing files digitally that you have backups of each copy in multiple places and that you consider storing old paper versions of each document should something happen to the digital versions.
Keeping Track of Your Real Estate Records
Keeping track of your real estate records may feel overwhelming, but it doesn’t need to be difficult. Take time to review which documents you have and which ones you might need to collect and store these documents in a safe space. If you want, you can digitize your records and store them safely on your computer or a flash drive, making sure you have backup copies of these records.
Most of the real estate records you need to have on hand should be kept indefinitely, as long as the property is in your name or you live on it, while other records, such as tax records can be disposed of between 3 and 5 years depending on circumstances. As long as you have a filing system, you can effectively keep your real estate records organized.