Rental Property Investor · Renton, WA · Member since 2017 · 40 posts · 2 votes
Hello BPocketters! I came from Mexico 10 months ago and I'm living in WA state since then. I'm under a tourist visa in process of adjustment of status. I'm very excited to start this endeavor and I'd like to go out and start analyzing deals.
The situation is that I went to an IRS office to get an ITIN number and told them that I am getting SSN in a couple of months. The person on the desk told me that it would not be convenient then for me to get the ITIN because by the time it is processed
Since I am a newbie in RE and with American laws I have some question I need help with:
1. Does anybody know if I need to have an ITIN or SSN by the moment I buy, sell or rent RE in America? Do I need to set it up before making any deal or can I just go and make it?
2. Could anybody explain me in which moments taxes get involved during the process of buying and selling, assigning contracts and renting?
3. When do I have to pay and/or file taxes and what kind of taxes?
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
9y
Are you paying cash? If so you don't need any number to buy.
If you are getting financing then you want to figure out what your lender requires.
Probably SSN, but occasionally ITIN can work, but very restrictive standards if they allow.
If you sell you want SSN, otherwise the title company I believe will hold 20% of the proceeds and remit to the government, then you have to file tax return to get it back or the balance left over after taxes.
For taxes you want to always check with your CPA.....you want to make sure to pay all the taxes due if you are not a citizen as it could affect your visa or transition status if you don't.
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
9y
Are you paying cash? If so you don't need any number to buy.
If you are getting financing then you want to figure out what your lender requires.
Probably SSN, but occasionally ITIN can work, but very restrictive standards if they allow.
If you sell you want SSN, otherwise the title company I believe will hold 20% of the proceeds and remit to the government, then you have to file tax return to get it back or the balance left over after taxes.
For taxes you want to always check with your CPA.....you want to make sure to pay all the taxes due if you are not a citizen as it could affect your visa or transition status if you don't.
Rental Property Investor · Renton, WA · Member since 2017 · 40 posts · 2 votes
9y
Thank you for the answer @Bruce Lynn. Just what I needed!
I'm planning on starting with HML, private money and partnerships for financing my first deals. Do you know if this work the same way when assigning contracts?
Lawrence, KS · Member since 2017 · 175 posts · 51 votes
9y
Yeah CPA for sure. Not sure how your legal status affects you but basically anytime an asset generates cash for you expect to pay taxes. If you make money on rent you are likely gonna be taxed. If you sell for higher then you bought you are gonna pay taxes. Some tax liability from rent income can be reduced via depreciation. Also if you incur losses you can get a tax shield and use that to reduce you tax liability on future earnings.
1. Does anybody know if I need to have an ITIN or SSN by the moment I buy, sell or rent RE in America? Do I need to set it up before making any deal or can I just go and make it?
YES, IT IS GOOD FOR YOUR CREDIT REPORT IF YOU BUY WITH A MORTGAGE.
2. Could anybody explain me in which moments taxes get involved during the process of buying and selling, assigning contracts and renting?
IF YOU RECEIVE RENT INCOME, THEN YOU PAY TAXES AT THE END OF THE YEAR BY DOING AN INCOME TAX RETURN. FOR THIS YOU NEED A SSN OR ITIN.
3. When do I have to pay and/or file taxes and what kind of taxes?
IF YOU HOLD THE PROPERTY ON YOUR NAME, REPORT INCOME TAX RETURN BY APRIL 15. IF YOU HOLD IT THRU A LLC, MARCH 15 and APRIL 15 FOR YOUR PERSONAL RETURN.
Rental Property Investor · Renton, WA · Member since 2017 · 40 posts · 2 votes
9y
WOW guys! This brings new pieces to the puzzle.
@Adam M. Thanks for your reply! It looks like any source of income generates tax liabilities, although some can be deducted or shield... is it the same? what kind of taxes can be shield? does this also varies from state to state?
@Fulton Abraham Sanchez Also thanks! this thing of the SSN and ITIN is becoming clearer to me and taxation dates were also part of my concern.
@Bruce Lynn yes, I was considering starting to assign paid cash.
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
9y
@Jose Lira If you're taking cash for assignments you might not need SSN but you will need some kind of tax ID. You want to report it and pay taxes on it.