ITIN application for rental income access with management

[Erin Wilks]

Hi Bigger pockets team

Foreign investor with a triplex in Georgia, currently applying for an ITIN at the request of my management company. They are collecting they rents and won't release them to me until I have my ITIN. Some one said that I should be just getting the rent paid directly to me from the tenants and just pay the management company their fees. 

I'm in the process of getting my ITIN application submitted and I have never done this before so I am unsure of the best course of action. Does anyone have any advice? is the ITIN an essential/ non negotiable when it comes to property management companies in general? 

Or can I be going about this differently?

[Drew Sygit]

@Erin Wilks

Foreign Owners of U.S. Rental Property

All foreign investors owning U.S. rental property are responsible for paying taxes on any and all rental income they
earn in the U.S. regardless of any tax treaties that may exist.
Since some of the regulations and requirements can be confusing, Logical Property Management (LPM) has
created this document to summarize the options for a foreign investor.

Foreigner investors can either pay a flat tax of 30% of their gross rental income or elect to file an annual US tax
return and reduce their taxes by claiming deductions relating to ownership and managing the property. (i.e. Property
Taxes, Insurance, Management Costs, etc.)

With either method of taxation, foreigner investors must have an Individual Taxpayer Identification Number (ITIN).

Obtaining A Taxpayer ID
As soon as possible, foreigner investors need to obtain a U.S. 'Individual Taxpayer Identification Number' (ITIN) for
each owner of the property (Each person listed on the property deed). The application is done with IRS Form W-7,
and foreigners must provide original certified identification documents.

IRS Form W-7
IRS Form W-7 Instructions

The IRS has 'Certified Acceptance Agents' who are authorized to certify foreigner investors’ original documents and
process the application. The W-7 form may look easy to complete, but we highly recommend finding a certified
agent to handle it. Certified Acceptance Agents are located worldwide. It normally takes 4-6 weeks for a W-7 to be
processed by the IRS.

Here is a link to the IRS website, listing Certified Acceptance Agents by Country:
IRS Certified Acceptance Agents

Upon receiving an ITIN number from the IRS, a copy of the IRS letter showing the new Individual Taxpayer
Identification Number (ITIN) must be sent to LPM.
Note: LPM will not manage rental property for foreign owners who refuse to acquire an ITIN number.


Form W-8ECI
The Internal Revenue Service (IRS) requires property managers to withhold 30% of gross rents to ensure foreigner
investors will file a tax return at year end. This is obviously very costly and cumbersome for a property manager and
Logical Property Management will not do it.
However, there is an alternative that will exempt a foreign investor from the mandatory 30% withholding.

After obtaining an Individual Taxpayer Identification Number (ITIN), submit a completed IRS Form W-8ECI to
Logical Property Management.
Note: Do not send the Form W-8ECI to the IRS. You send it to your property manager.