Confused about Taxes situation to get a new mortgage

Minneapolis, Minnesota
Mortgage Brokers & Lenders
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Confused about Taxes situation to get a new mortgage

Rahul Gupta
Investor · Member since 2018 · 47 posts · 19 votes

Hello,

I have filed for an extenrion on my 2021 taxes and want to apply for a second mortgage.

The only way i can qualify for it is by using my income from Airbnb, as my current W2 income will not work for getting another mortgage due to the DTI ratio.

My total income in 2021 from Airbnb was 20k but i also had expenses like the mortgage payment, Cleaning, maintenance etc of around 17k.

Do i not show the expenses and deductions on my tax return so that the income that shows from Airbnb is 20k?

Do they use gross or net income from Airbnb to qualify someone.

I also dont want to pay a bunch of taxes unnecessarily by not showing the expenses, and still qualify for the second mortgage.

Any suggestions will be appreciated.

Thank you

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Rahul Gupta have you looked into a DSCR loan or a portfolio loan with your local bank?

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Rahul Gupta
    OP
    Investor · Member since 2018 · 47 posts · 19 votes
    4y

    @Jordan Moorhead I am really hoping to put down between 3- 5% in down payment and I believe that can only be done through a traditional bank. 

    If I figure out what they see in the tax returns, things will be clear. 

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    4y

    @Rahul Gupta @Tim Swierczek can probably help with that

    [email protected]512-888-9122
    The Moorhead Team5140 Reviews
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  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    4y

    'Choosing' not to report your expenses specifically to qualify for another loan is likely mortgage fraud. You're presenting an untrue picture of your financial position in order to secure financing. I realize you may not be intending to be fraudulent but that is what you are doing. So report everything and find a loan that works with what you can offer. Also your mortgage isn't an expense, only your interest portion so maybe you profited more on your Abnb than you think...

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  • Rahul Gupta
    OP
    Investor · Member since 2018 · 47 posts · 19 votes
    4y

    Thank you for the insight! I do need to work with a CPA to figure this out and do the taxes correctly. Good to know that Mortgage payment is not an expense really which would help. 

    1Reply
  • Tim SwierczekPro Member
    Lender · White Bear Township, MN · Member since 2016 · 1k+ posts · 1k+ votes
    4y
    Quote from @Jordan Moorhead:

    @Rahul Gupta @Tim Swierczek can probably help with that

    I would be willing to review your taxes and let you know how a lender would view them. 
    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    4y

    You need to report the expenses on your return. Failure to do so will be an incomplete / inaccurate return.

    The other issue you may see is that lenders do not want to add air-bnb income because there is no 'long-term lease'(No guarantee of future revenue).
    make sure to shop around for a lender that will include it for DTI purposes.

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
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