Is a W-9 a Closing Document in a Real Estate Transaction?

The W-9 aids in IRS reporting for real estate transactions.

Joe Raedle/Getty Images News/Getty Images

If you’re a first-time homebuyer, you might find yourself surprised by just how many closing documents are involved in a real estate transaction. Along with the real estate transfer documents and the home loan paperwork, you also need to complete IRS forms. In many instances, a W-9 will be among the batch of forms you will need to sign when you buy a property.

The Real Estate Transfer Documents

When you buy a home, the current owner needs to transfer the title of the property to you. He needs to sign several documents to complete this task.

  • Deed for the property 
  • A bill of sale for the items inside the home that are part of the transaction, such as appliances
  • Affidavit of title
  • Transfer tax declaration

Home Loan Documents

Most home buyers take out a mortgage to finance their home purchase. The lender prepares the mortgage documents prior to the closing. There, you will sign the mortgage paperwork, which is registered with the deed as legal proof of your debt to the lender.

The lender also will ask you to sign the mortgage application as a means of confirming the information is correct, as well as a note, which is your agreement to repay the mortgage at a certain rate of interest. The note also sets out the dollar amount of your payments and details when and how you make them.

W-9 as a Closing Document for Real Estate Transaction

If you are taking out a mortgage loan to finance your home purchase, you will be asked to sign a federal W-9 (Request for Taxpayer Identification Number and Certification) form. Since you can claim a deduction for mortgage interest on your federal income tax return, you must complete this form, which includes your name, address and social security number, at the time of closing.

In a situation where your mortgage will be held by a private party, such as the home seller, that person also must fill out a W-9 with his full name, address and social security number.

Report Mortgage Interest on your Federal Income Tax Return

You will receive a tax document, known as Form 1098, from your lender that reports the amount of mortgage interest you paid during the year. When you’re ready to complete your income tax return, enter the amount of interest paid on Schedule A (Form 1040), line 10.

In a case where you own the home with one or more people (other than your spouse if you file your taxes jointly) and one of the other owners received the Form 1098, there is a strategy so that each person on the mortgage can claim a portion of the interest. Attach a statement to your income tax return explaining the situation to the Internal Revenue Service. List the amount of interest paid by each owner. Also include the name and address of the person who received the 1098 form.

During a real estate closing, the number of documents can make the transaction a confusing time. If you have any questions about what you are signing, be sure to ask them before you put pen to paper.

Photo Credits

  • Joe Raedle/Getty Images News/Getty Images

About the Author

Jodee Redmond is a freelance writer, blogger and editor who has been working full-time for over 15 years. She is a graduate of Centennial College and has worked as a tax consultant and a legal assistant. Her previous experience and boundless curiosity is a distinct advantage when writing about such varied topics as income tax, insurance, commercial property, business, construction, addiction, freelance writing and more.


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