I think this is both a tax issue and an estate issue.
Years ago, I was taught to keep forever all documentation that proved large loans were paid off, such as former mortgages and car loans. Is that still true? (Of course, you would keep the documentation for all real estate and cars you currently own.)
Is it OK to shred these things at some later date? 7 years after the sale? 10 years? Is this documentation EVER required for any reason? For tax reasons, the old capital gains primary residence rules used to require you to keep records of previous real estate sales. Is this still required? Keep them just in case the rules change?
Years ago, almost all consumer loan interest was tax-deductible, but that is no longer the case. I can understand keeping car loan documentation for some length of time after selling a car in case there is any question about clear title.
Is there a limit on how long estate asset issues can be contested?
If you keep the real estate documentation, how much do you keep? The tax returns and supporting documentation for the year the real estate was bought and sold? All of the old Agreements of Sale? The copy of the deed?
For example, I bought my first house in 1987 and it was sold in 1997. I had a house built in 1998 that was sold in 2000. I bought a house in 2003 that was sold in 2005. I bought my current house in 2006 and it will be sold this year. I am under contract to buy a house this year.
I still have all of my tax records starting from 1980 when I had my first fast food job. I know I should have destroyed a lot of this years ago. I’ve been given great direction on how long to retain tax records associated with my business, but I am more cautious about destroying personal records.
I am almost done sorting, shredding, filing, storing paperwork from my parents’ estate – probably keeping a little more than necessary. I am in the process of moving into my retirement home and trying to lighten the load for the poor soul who will have to clean out my stuff when I leave this planet.