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W-9 questions

Started by DrewC • 5 replies • 1043 views

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DrewC (Illinois)
Posts: 3
Posted:
Hi All,
My HOA has just decided to start charging for lender questionnaires. They thought it was an easy way to put more money into the reserve funds, however no one thought about the taxes that might have to be paid.
So, my question is, how should the W-9 requested by a lender be filled out, especially Line 3?
We are a NFP Corp., but what type?
Can anyone help, we are in Chicago, IL.
Thanks!!
MiaR1 (Illinois)
Posts: 46
Posted:
Drew, worth confirming with an accountant about what I am saying. But, my understanding is that this income from the lender will be considered as a part of the association income like parking fees, income from Laundry etc. so when you fill out section 3 of W-9, you select “other” and write in non profit Association. All non profits are not 501c3 exempt. Condo association is a business but because it’s purpose is not just of a vendor and consumer, association is given a non profit status.
BillH10 (Texas)
Posts: 1,217
Posted:
Drew

You say the HOA just implemented a policy to charge for completing lender documents, if you have a management company are you certain it is not the MC which is charging for the work?

We own a management company in Texas. We stipulate in our contract we charge for completion of several types of forms when a property changes owners or is refinanced. Completing some of those forms can take 30-60 minutes if the requested information is not readily available. Invariably there are questions from real estate agents, title companies, the lender, and inspectors. Our fees take into account we sometimes spend 3 or 4 hours between telephone calls, email, and the occasional visit to the property to meet someone involved in the transaction.
BillH10 (Texas)
Posts: 1,217
Posted:
Drew

You say the HOA just implemented a policy to charge for completing lender documents, if you have a management company are you certain it is not the MC which is charging for the work?

We own a management company in Texas. We stipulate in our contract we charge for completion of several types of forms when a property changes owners or is refinanced. Completing some of those forms can take 30-60 minutes if the requested information is not readily available. Invariably there are questions from real estate agents, title companies, the lender, and inspectors. Our fees take into account we sometimes spend 3 or 4 hours between telephone calls, email, and the occasional visit to the property to meet someone involved in the transaction.
DrewC (Illinois)
Posts: 3
Posted:
MiaR1,
Thank you for commenting, I will confirm with tax professional.
Thanks!!
DrewC (Illinois)
Posts: 3
Posted:
BillH10,
We are a small-ish self-managed condo build of 21-units total. We moved away from MC to save $6000+/yr in management fees. However, I FULLY understand the time & commitment it takes when units are sold / re-financed.
Thanks for your reply!

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