Paperwork related to property can pile up, but the team at US Tax Professionals advise that it’s important to maintain any records potentially applicable to federal tax law
North Vancouver, BC -- (ReleaseWire) -- 09/19/2019 --As a firm that specializes in cross-border taxation, the team at US Tax Professionals in Vancouver remind taxpayers that keeping full and accurate homeowner records is not only vital for claiming deductions on tax return, but also for determining the basis or adjusted basis of a home. Records must be kept as long as they are important for federal tax law—and must be available to the IRS upon request. For more, go to: https://us-taxprofessionals.com/newsletter.php#2
There's always a lot of paperwork associated with property transfer and maintenance. Important records include the purchase contract and settlement papers if the property was purchased, or other objective evidence if it was acquired it by gift, inheritance, or similar means. However, it's also important to also keep any receipts, cancelled checks, and similar evidence for improvements or other additions to the basis.
Keep paperwork related to:
- Renovations or additions
- Roof replacement
- Paving or cement work
- Air conditioner installation
- Assessments for improvements
- Damage or restoration
It's also important to track records related to any decrease of the basis:
- Insurance/reimbursement for losses
- Deductibles not covered by insurance
- Payment received for easement or right-of-way granted
- Value of subsidy for energy conservation measure excluded from income
- Depreciation deduction for business or rental purposes
How the records are stored is not an issue, but they must comprehensive, accurate, and available for submission to the IRS. Keep records that support any item of income or a deduction appearing on a return until the period of limitations for the return runs out. A period of limitations is the limited period of time after which no legal action can be brought.
For assessment of tax, the period of limitations is generally three years from the filing date. When filing a claim for credit or refund, the period of limitations is generally three years from the date of filing the original return—or two years from the date taxes were paid, whichever is later. Returns filed before the due date are treated as filed on the due date.
It may be necessary to keep records relating to the basis of property longer than the period of limitations. For example, basis is needed to determine gain on home sale. Any gain on sale of a home is tax-exempt for amounts up to $250,000 ($500,000 for married couples). Basis is also important in figuring casualty loss, on conversion of the home to business use, or where there's a gift of the home (in this case, it is important to the receiver).
When in doubt, keep the records as long as the property is owned, or after selling/gifting as long as the period of limitations applies. For assistance on filing papers related to the individual taxation of US citizens in Canada (and vice-versa) contact US Tax Professionals in Vancouver at (604) 281-3318.
About US Tax Professionals
US Tax Professionals provide tax services for dual American and Canadian citizens in Vancouver. Founded in 2013, they specialize in taxation for US citizens and expats, taxation and accounting for business, cross-border taxation for US and Canadian citizens, as well as accounting and taxation of alternative investments, including private equity funds and hedge funds.
For more information, visit https://www.us-taxprofessionals.com/ or call (604) 281-3318
US Tax Professionals
Company Website: https://www.us-taxprofessionals.com