Home improvements can be such a headache that keeping track of your expenditures can seem daunting. Managing more than one contractor, juggling visits to Home Depot and watching your budget spiral out of control can distract from important bookkeeping that needs to be done.
One of the smartest ways homeowners can back up their improvements is to keep the receipts and invoices from any home improvement projects. According to Investopedia, keeping an organized file can substantiate valuation and also help improve your earnings on a sale.
"When you sell your home, you can use these costs to increase your home's basis, which can help you to maximize your tax-free earnings on the sale of your home," writes Amy Fontinelle. "In 2008, you could have earned up to $250,000 tax free from the sale of your home if it was your primary residence and you had lived there for at least two of five years before you sold it."
For some projects, it may too late to retrace your steps through expenditures and payments to contractors. However, filing them where you can easily access them for presentation can streamline your interactions with real estate insurance companies, brokers, agents and accountants.
As a measure of due diligence, you might want to ask your contractor's office for scans or hard copies of old receipts, especially for major items. Adopting responsible bookkeeping practices for home repairs is something you can also implement moving forward. If there's an improvement project you're dying to dig into in 2015, be sure to establish a clear paper trail of what you spend. Resolving to straighten up your books can save you time and money in the future.