All Forum Posts by: Ryan Stirling

Thanks so much, @Charles D., for the quick and thorough reply!! This is super helpful!

Context: Seller is a foreigner to the US and special tax withholding must take place via FIRPTA/HARPTA. In the offer, the seller is requesting that we add this term to the contract:

Request: “Buyers authorize Escrow to release their SSN/ITIN/EIN number to Seller's CPA upon request for the limited purpose of Seller filing an exemption from FIRPTA/HARPTA withholding and/or claim FIRPTA/HARPTA withheld on the transaction on their U.S. and Hawaii tax returns and for no other purpose without the prior written consent of the Buyers."

Seller provided more context:
"The Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) made the Buyer responsible for withholding tax from the Seller on the sale of real property and remitting the tax to the Internal Revenue Service (IRS). As a result, IRS credits the Seller's FIRPTA withholding to the Buyer's tax account (i.e., SSN, ITIN, or EIN), not to the Seller's account.

Therefore, for the Seller to claim the 15% income tax withheld from their sale proceeds on their income tax return, the Seller must provide documentation that proves the FIRPTA withheld was both paid to the IRS and shows where the money is being held. The IRS has recommended that foreign taxpayers with FIRTPA withheld to E-File their tax returns to facilitate reconciliation of tax withheld and the tax claimed. IRS will reject an E-filed tax return if the Buyer's SSN/ITIN/EIN provided on the tax return.”

Question:

- I've done some searching and reading online and I can't find any definitive information about this request. I think all sources do state that the seller needs to provide their SSN/ITIN/EIN/etc to the buyer so the buyer can file proper forms and withhold X% for tax purposes. I haven't found conclusive instruction online that matches the context seller provided - "IRS will reject an E-filed tax return if the Buyer's SSN/ITIN/EIN provided on the tax return." Does anyone know conclusively what should be required? If it does require buyer to share SSN/ITIN/EIN with the seller, does anyone have the exact tax form that shows up on? Would love to see it firsthand. 

Thanks, Mike!!!

Hi BiggerPockets,

Long-time reader, first-time poster here! I'm looking to buy a STR in Maui, specifically in Kihei. Are there any investors out there familiar with this area that can help give me some advice on STR buying/managing in Maui?

Best,

Ryan

This is a little off topic, but how does going through a divorce affect credit score? I haven't been through a divorce and have no idea.

I just checked out my equifax credit report and lists all of the loans as having credit limit as $0, which validates what you said; however, in my credit summary, I have an extraordinarily large debt/credit ratio which gives me an also extraordinarily large debt/credit ratio for all of my debts.

I just checked out my equifax credit report and lists all of the loans as having credit limit as $0, which validates what you said; however, in my credit summary, I have an extraordinarily large debt/credit ratio.

I understand that reducing my debt will improve my credit. My question is if I should be cautious about paying off a loan because the credit available will be erased from my credit report. Would I be better off keeping all the loans on there until I'm in a better position to pay them all off?

I have student loans that I am paying. I just pulled my credit report and they are greatly affecting my overall debt/available ratio. What happens if I pay off one of the loans, do I lose that debt + what is available? I was considering paying off one of the loans, but will I be affecting the ratio in an unanticipated way.

Example:

Loan A $3500 Available - $2000 debt left. 57%

If I paid it down to let's say $200 5%

This would greatly improve my overall debt/available ratio; however, if I paid it off completely, I would then extinguish that debt and that credit available not including that good ratio in my overall ratio.

Please let me hear your thoughts on this.

I'm pretty sure MikeOH is going to say the same thing, but what happens if your "back-up buyer" falls through. You have to consider the possibility of you going through with the closing without someone taking it off your hands. What happens then?