Property has three owners. One of the owners wants to buy us out. She wants us to sign a W-9. Is this settlement taxable and do we have to sign?

Asked by Delrio, Springfield, MO Mon Apr 18, 2011

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Irina Karan, Agent, Aventura, FL
Tue May 8, 2012
Hello Delrio,

Before doing anything, you got to consult a CPA and an attorney.
This forum is about real estate, not taxation related to businesses - and if one of agents responding makes a mistake, or does not tell you about one of the problems that might arise in the future - you'll be the one paying, not the agents.
Truly, take care of it with a pro.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
1 vote
Jon Petersen, , Corona, CA
Tue May 8, 2012
Irina is right. You definitely should be consulting your tax advisor and a real estate attorney. Real estate agents, while they may be very knowlegable about taxes or legal implications, they dont specializie in those areas, and might not give you good advice. They are specialists in marketing and selling property, and only that.
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Guy Gimenez, Agent, Austin, TX
Tue Apr 19, 2011
You may have taxable income or you may not...depending on whether or not you have a profit or loss on the property. You didn't mention how you acquired the property and what you have invested (your basis) in the property so there's no clear answer on the taxable status of any proceeds you may receive.

IRC Section 1445 requires buyers of real property to either withhold 10% of a seller's proceeds or have the seller provide a statement, under penalties of perjury, that the seller is not a foreign individual or entity as defined under the Code. A W-9 contains the necessary language and that may be why that buyer is requesting it.
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Tim Moore, Agent, Kitty Hawk, NC
Mon Apr 18, 2011
No, you don't have to sign anything.

Yes, it would be taxable depending on the sale price vs the purchase price vs other things that your tax advisory can explain. You would be looking for capital gains that would require taxes if the property was never your primary residence. You will need a lawyer to prepare the documents to transfer your portion of the ownership, so ask his advice after you speak to your tax person to see what cap gains you are looking at.
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Dp2, , Virginia
Mon Apr 18, 2011
Yes, this transaction is taxable, but what you'd have to pay (and when you'd have to pay it) depends upon how you'd structure that transaction. You should consult with a CPA regarding the tax related issues, and you might want to consult with another knowledgeable pro for help with structuring that transaction.
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Phil Rotondo, Agent, Melbourne, FL
Mon Apr 18, 2011
For this transaction all of you should consult an attorney.
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