Market Wise Q&A: Do We Have to Provide the Buyers with Our Social Security Numbers?
Pat Kapowich for the San Jose Mercury News Q: While filling out the mountain of paperwork required in listing our house for sale, my husband decided we would not complete one form, to the chagrin of our agent. It is a tax disclosure form that asks for our social security numbers. The agent did his best to explain the requirement for the form, but to no avail. We are actually losing money on our home. Is this form necessary to complete a sale where the seller is not making a profit?
A: Maybe not. Real estate attorneys remind us that whether there is a loss or gain on the property, the buyer is required to set aside 10 percent of the proceeds for Federal taxes as well as 3.3 percent in California for instance. However, the Foreign Investment in Real Property Tax Act, (FIRPTA), provides for an exception for the withholding of these seller funds. Unbeknownst to many, there is another way for sellers to avoid sharing a seller's social security number with buyers and their real estate firms. That would be to have escrow secure all the required information to comply with FIRPTA's exceptions and issue a substitute document known as a Qualifying Statement form, (QS form). Issuing the QS form indicates the escrow holder has all the necessary information to comply with FIRPTA, therefore, eliminating the need to withhold seller proceeds as well as sharing their social security numbers with strangers.
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Send questions to Pat@SiliconValleyBroker.com