Real Estate Investor · Charlotte, NC · Member since 2011 · 133 posts · 5 votes
what are acceptable ways of providing proof of rental income? Is it acceptable to HML to show check deposits in my account? Will this work for banks? Or is W2 the only way to show proof of this income? What tax breaks if any does rental income provide?
Yes, tax returns, when you have a new property that doesn't appear on your last return, you can show a copy of the lease with more than 6 months remaining, you can show past deposits in your account along with previous statements showing the difference. A HML may care especially if they require an assignment of rents on the note and what satisfies them will vary since the sophistication of HMLs varies widely.
Depreciation is a deduction scheduled for rental property that is a non-cash deduction, but it is recaptured at the time of sale, there are other related expenses of a business operation that will allow you to deduct expenses from the income as well. How taxes would effect you, you need to see your tax advisor. :)