How long to keep certain financial records has been the age old dillemma

Real Estate Agent with Berkshire Hathaway HomeServices 01238708

How long to keep certain financial records has been the age old dilemma!

This post is intended to give you some guidelines as to which documents you should save that might be needed for a smoother closing and or jut to make your life simpler.

endre barath marina del rey realtor

The most often asked and number one question was: how long to keep tax returns? The answer is not as clear as one would expect. My answer is seven years. The reason that is, because The IRS ha a three years rule to audit your tax returns if they suspect a “good faith error”. Three year error also applies to you, if you discover a mistake in your return and decide to file an amended return to claim a refund.  The IRS also has six years to challenge your tax return if they think you under reported your gross income by 25% or more. Hence my reasoning to keep the tax records for seven years!

endre barath marina del rey realtor

IRA Contributions records: to me it is clear you need to save them permanently. I would suggest you keep these records indefinitely to prove that you already paid tax in this money or to assure that no one make errors and you can prove that you contributed to an IRA or numerous IRA funds. After all this is your money!

House or Condominium records: Keep al records documenting the purchase price and the cost of all permanent improvements, such as remodeling or additions to the property. All expenses related to selling or ad buying the property, such as escrow costs, legal fees and including taxes paid. This will make life easier for your accountant when he or she is trying to figure out what your capital gains tax burden will be when you sell the property.

I hope I made you think about the most important documents and how long to keep. Keep in mind this is not an all inclusive list, but in my opinion these are at the minimum the most important documents that you should hold on to.


If you are considering buying or selling a luxury home, or an ultra luxury home, or luxury investment real estate, or luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 or email me at or visit one of my websites at http://www.endrebarath.comYour Pet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations




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Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Endre: And keep them in a bank safe that also includes other important documents. This includes my Naturalization papers (did you know that you can't get a DUPLICATE, you need to totally update it if you should lose it; and yes, you need to prove sometimes that you are legally in the US such as when you get your real estate license for the first time). And, yes, I have a BIG box at the bank.

Sep 02, 2013 05:00 PM #1
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Endre - a great checklist for keeping certain documents and records.  This post definitely deserves a bookmark for reference.   

Sep 02, 2013 05:44 PM #2
Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055
Texas Five Star Realty, Plano Texas - Frisco, TX
Homes for Sale in Plano, Frisco, Prosper, Allen TX

For real estate transactions lawsuit purposes, NOT FOR IRS, we (at least in Texas) must keep all records for 4 years.

Sep 02, 2013 06:20 PM #3
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

Good info Endre. Being organized certainly can help in the future.

Sep 02, 2013 06:46 PM #4
Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

For someone as organized as I am, my tax returns are here somewhere, but I'd have to hunt for them. Good checklist for other important documents too Endre.

Sep 02, 2013 09:03 PM #5
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Endre, I keep for 6-7 years. That goes back to retaining records for my company and for the State and IRS. I would rather be safe than sorry.

Sep 03, 2013 02:44 AM #6
Chris and Dick Dovorany
Homes for Sale in Naples, Bonita Springs and Estero, Florida - Naples, FL
Broker/Associate at Premiere Plus Realty

Scan them all and put them on a disk.

Sep 03, 2013 06:13 AM #7
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Endre - I keep all important documents, but maybe after 10 years I'll start to shred them.

Sep 03, 2013 09:51 AM #8
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

It is important to keep some financial documents, and you have provided a good list of what, and how long to keep them. I would choose to scan all important documents and to keep them on a computer that is backed up daily.

Sep 03, 2013 10:21 AM #9
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Endre Barath, Jr.

Realtor - Los Angeles Home Sales 310.486.1002
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