I am now under contract for my first property.
We are purchasing with cash, will be renovating the property and, at some point in the future, will likely use it as a rental. (There will be some personal use first.)
Since there will be rental income associated with the property I want to ensure I'm setting myself up for success with taxes.
Q: When do I ask for a W9?
We are having inspections completed today. The inspection was scheduled through a company but I'm curious as to whether I need a W9 from them since the inspection cost is $615.
For other services, such as the roof or driveway that the property needs, do I ask for a W9? Something different? Then... what do I do with them??
I would ask your CPA about this not a forum. You are a business man now that you are buying your first rental property. Don't do you taxes alone.
Its a good idea to get a W-9 from service providers on file prior to issuing payment via cash or check. You may need to file a 1099 by 2/1 of the following year. The information needed to file the 1099 will be found on the W-9.
@Christopher Abele - Your CPA is the best and ONLY person you should take tax advice from. Now, based on my experience keeping books in Quickbooks, you should get a W9 from all vendors that you pay with cash or check.
Quickbooks has explicitly told me I do not need to 1099 any amounts paid via credit card, because the credit card processor will 1099 that vendor directly. I am hoping they are correct.
And I agree with Daniel: I would let ALL service providers know that you will only issue payment once a W9 is on file. It can be very hard to track people down for the W9, and I have had a prior accountant tell me that I should have withheld 25% of pay until a W9 is on file. He said there is a way that I can escrow that 25%, but in my situation it was too late, as I already paid the contractor. Thankfully, I did end up getting the W9 after a lot of pestering.