If you own a home, a commercial building or even a vacant lot, you’re required to pay property taxes. Your municipality conducts assessments on property to determine its value for taxation purposes. These fund are used to pay for local government employees’ salaries. Property taxes also fund firefighting and police services, maintenance of parks and recreation areas, street and traffic lights and road maintenance. One of the challenges that a homeowner faces is where to find enough space to store items accumulated over time, including various tax documents and property tax receipts. While you don’t want to discard them too soon, you may be wondering just how long you need to keep your property tax receipts.
Keep Property Tax Receipts as Proof of Payment
You’ll need to keep receipts for your property tax payments in case there is any question about whether they are up to date. At minimum, keep property tax receipts, such as cancelled checks, online payment receipts, receipts with official stamp, until you receive a new statement or property tax bill indicating that the payment has been credited to your account.
If you have a mortgage on your home, the lender will want to ensure that you keep the property taxes up to date. Sometimes the taxes payments are made through your mortgage lender. Hang onto your most recent property tax receipts in case you are asked by your lender to produce them. You will also need to provide proof that your property taxes are up to date if you decide to refinance your home with a different lender. The new lender will not be able to advance funds if the property tax payments are in arrears.
Hang Onto Property Tax Receipts With Income Tax Records
Property tax receipts also become important at income tax time. If you pay property taxes on your home, you can itemize deductions on your federal income tax return. According to the IRS, most taxpayers will benefit by itemizing them using Form 1040. Keep the receipts with your income tax returns for a minimum of three years. This is the minimum limitation period that you can amend an income tax return or that the IRS can audit you and determine that you owe more tax.
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Special Circumstances for Property Tax Receipts and Income Tax
There are some circumstances where you will need to keep your property tax receipts for income tax purposes longer than the standard time period recommended by the IRS. If you haven’t filed an income tax return for one or more years, keep property tax receipts indefinitely. The same recommendation applies if you have not been honest when filing your tax return.
How to Keep Copies of Property Tax Receipts
If you feel as though you’re being buried in tax records and property tax receipts, consider scanning the documents and storing them electronically. You’ll be able to retrieve them as needed without having to physically store paper records. For security reasons, you can copy the records to a flash drive and place it in a safety deposit box, where it will be safe from fire and other hazards until needed. For specific questions about how long you should keep copies of property tax receipts and other documents, consult a tax specialist for guidance.
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