Receipts and Records

Keep all your records together in a safe place. That means estimates, contracts, invoices, and especially canceled checks and receipts. Organize them into files if you wish, but at the very least keep an oversize envelope into which you toss all paperwork related to your renovation.

These records may be helpful in resolving any disputes and disagreements in the short term. When it comes to filing taxes for the year in which the remodeling was done, consult with your accountant regarding which expenses may be tax deductible. Among them might be certain closing costs; sales tax paid on large purchases (kitchen appliances, for example); and perhaps improvements that are work- related.

Later, when and if you sell your home, your receipts and check stubs will enable you to calculate the cost basis of your house for purposes of calculating capital-gains tax that may be due.