What to do first year after purchase: Claim Loss or Claim Income for Future DTI Ratio

[Jeff Brower]

Hello All,

I am just about to purchase my first SFR or MF buy and hold long term. I have done some searching on this topic and haven't found much so that is why I ask.

I would like to know what most of you would do in this situation. After two years of history on my W2's I will need to use the income from the property to increase my DTI ratio in order to qualify for more future loans. Even though this is the case I know that the first year of owning a property includes most of the initial expenses that can be used to claim a loss in order to offset revenue taxes. What are your thoughts? I am leaning towards not claiming any costs in order to maximize my claimed income to minimize my future DTI.

Does the bank average the income from the first two W2's? If they only take the second year into account then maybe it would be best to claim a loss the first year and a gain in the second. My local credit union told me that that they need to use the lesser of the two previous W2's for my income; in this case I would want to maximize income for both years.

What have you all done and how has it worked out to minimize your future DTI ratio?

Thanks!