When is the right time to throw out baby clothes and toys?

It is a difficult decision indeed, because clothes and toys also have an emotional value. I have still kept few toys and clothes of my kids because they represent few unforgettable lovely memories.
You can categorize things based on their emotional value or significance. Put those selected items in a box and store. It will also ensure that you have essential supplies in storr, in case you have a baby in future.
I think separation from your loved things can be easier if you are sure that these things can bring happiness for those in need. Think about donating extra baby clothes to a children’s hospital or charity. You will be lot more satisfied and contented by making others happy 

Never! haha. I still have my bassinet and my youngest baby is now 8 years old. Getting rid of those sweet, tiny things can be so hard because it signifies the end of a very special era. I try to keep the things that are most special and place them in each child's keepsake box and then i like to give away the not-so-sentimental things to friends and family or donate to a charity.

We have a lot of options close by to purchase used baby clothes. I think if you're tight on space, you could stand getting rid of some and keep a few boxes just in case. If you do have another baby, there are options for making sure you have what you need. I like to keep the sentimental, high-quality items regardless of if I'm having another baby. I'd like for my kids to have them or pass them on to family members.

I love to shop consignment shops. The newborn and infant clothes are often in the best shape because they aren't worn for longer periods of time. They grow out of them too quickly!

Also, many friends are more than willing to pass us hand-me-downs, even if it's temporary. I just had my third child, the only girl, and I had a friend with a girl a few months older. She would pass me the box of clothes, we wear them, and give them right back. It was great and resourceful. You could also see if you have a friend who is expecting and you'd be willing to loan out your clothes for awhile.

We also have a local clothing swap which has been very helpful. You can drop off whatever clothes you don't want and then pick up whatever you need. It's free and a great way to move up in sizes.

When it comes to keeping clothes, whether or not you might have a more children will probably be the primary factor when it comes to deciding what to keep of whether to keep anything. It might be worthwhile for you to take a good look through these items and select those that are still like new, or that have sentimental value and set them aside. As for the rest, if you have the finances to buy a new infant wardrobe, then consider making a charitable donation of the baby clothes and infant items that you have. I'm sure there are many organisations close to you that will be able to put them to good use.

When it comes to toys, I can appreciate the Montessori principles of (1) only having a few toys accessible to your child at a time and (2) replacing your child's toy with something more advanced once they have mastered the skill of the toy. This means that if your child has outgrown the toys, it may be time to pack them away or pass them on. A local creche or charity would probably love to receive a donation of toys, as long as they are still safe and in good working order. If you would like to make some money for new toys, take a look for local yard sale or garage sale groups where you may be able to sell or swap your toys. If they have some sentimental value or if you want to keep them for friends with younger kids that visit, then pack them away somewhere that they do not clutter your home. You might also like to keep solidly made, classic toys (like wooden toys or Lego) as these are timeless and will probably still be good one day when you have grandkids.

My daughters are 7 years apart in age. I debated this issue, too, especially because we dod not know if we would be adding to our family after our first child was born.

I did end up getting rid of most all the clothing, with the exception of the keepsake items, after my oldest started preschool. More so with the clothes, as not knowing if we would have another girl, but also recognizing that since my children would be different people, I should allow their clothing to reflect this. Even at a younger age, each of my girls had different tastes in fabric, so I tailored their clothing preferences to that.

Maybe you could keep just one tote of clothes? Something which would not take up a lot of space, but provide you with outfits for different ages?

As far as the toys, maybe keep those toys which are learning helpers, those ones which never go out of date, and if you have another child, their older siblings can enjoy playing with something familiar, while interacting with the new addition!