Q. I'm applying to rent an apartment downtown and the landlord has asked me to submit a W-9 form. Why do they need a tax document from me as they’re not paying me any income! Why would a landlord require that?
A. In New York City, a landlord must put security deposits in an interest bearing account if the building where the rental is located in has six or more units.
Any accumulated interest earned on the deposit must be distributed to the tenant or, with the tenant’s permission, added to the deposit to bring it up to the amount required by the lease. The law also allows the landlord to deduct an administrative fee of one percent simple interest from the deposit.
When the landlord distributes the accumulated interest to a tenant, they must file an information return (i.e. Form 1099) with the IRS. Any person or entity that is required to file an information return with the IRS must obtain the correct taxpayer identification number of the recipient. That’s where the Form W-9 comes in.
Form W-9 simply provides the landlord with your correct taxpayer identification number so that they can properly complete the Form 1099 required for interest earned on your security deposit. Assuming you live in a building with six or more units, or in any building if your landlord voluntarily chooses to hold deposits in interest bearing accounts, such accounting practices are to be expected.
Mike Akerly is a New York City real estate attorney, landlord, and real estate broker. He is also the publisher of the Greenwich Village blog VillageConfidential.
Note: The information provided here is for informational purposes only. It should not be construed as legal advice and cannot substitute for the advice of a licensed professional applying their specialized knowledge to the particular circumstances of your case.