Keeping purchase and selling-cost records for a basis calculation
Maintain accurate financial records for your home. Learn which purchase and selling costs impact your adjusted basis for federal tax purposes.
The short answer
To calculate your adjusted basis, you must account for your original purchase price plus capital improvements, minus any exclusions. Keeping meticulous records of your purchase closing statements, receipts for major home improvements, and documentation of selling costs is essential for determining your true gain or loss upon selling your primary residence.
Tracking Your Original Basis
Your starting basis is typically the purchase price of your home. Keep your initial closing disclosure and settlement statement as the foundation for all future calculations.
Decision Worksheet: Create a document listing your purchase price, closing fees that were part of the acquisition, and any initial capital investments.
Capital Improvements vs. Maintenance
Capital improvements, like adding a deck or replacing a roof, increase your basis. Regular repairs, such as painting, generally do not. Keep all invoices for major work.
Hypothetical Planning: A homeowner saves receipts for a kitchen remodel, labeling them as 'Capital Improvement' to distinguish them from general repair receipts.
Factoring in Selling Costs
When you sell, you can reduce your reported gain by subtracting selling costs such as broker commissions, title insurance, and transfer taxes.
Ask a professional: Which closing costs on my settlement statement are eligible to be subtracted from the sale price for capital gain calculations?
Long-Term Record Retention
Store these records in a secure, fireproof location or a digital vault for as long as you own the home. Once you sell, keep these records at least until your tax statute of limitations expires.
Action: Scan all your closing documents and home improvement receipts into a digital format now, rather than waiting until the time of sale.
Checklist
- Store your original purchase closing documents securely.
- Save receipts for all capital home improvements.
- Label expenses as either 'Improvement' or 'Maintenance'.
- Retain all documentation for selling-related closing costs.
- Keep a master digital list of adjusted basis costs.
Common questions
Do I need to keep receipts for small repairs?
General repairs for maintenance do not increase your basis and are typically not needed for tax basis calculations. Keep them only if necessary for potential warranties.
Can I include my broker commission in the selling cost?
Yes. Broker commissions, along with other specific closing fees, are generally considered selling expenses that can be subtracted from your sale price when calculating your gain.
Sources
- CFPB — Loan Estimate explainerChecked October 12, 2026
- CFPB — Closing Disclosure explainerChecked October 12, 2026
- Illinois Department of Revenue — Property tax overviewChecked October 12, 2026
- IRS Publication 523 — Selling Your HomeChecked October 12, 2026
This guide is general educational content from SQFT IO, prepared with AI assistance. It is not legal, tax or loan advice. Talk with a licensed attorney, tax professional or lender about your situation. SQFT IO Illinois license 478.027617.