Memoirs of a mortgage broker: Accounting tips=Depreciation!!!

[Rick Rucker]

Many folks find out the hard way what items can be utilized as income in a financing transaction. While most lenders view things case by case depending on line of work, almost ALL will include the following expense as actual income:

Depreciation-Depreciation is something your accountant should be drooling over to utilize as an expense on your taxes.  You can write it down as an expense to decrease your overall tax liability back to the good old IRS. If you have rental income, and you aren't claiming it... please fire your accountant.  You are shooting yourself in the foot and also make it hard for the lender to get you approved.

Although we do have some bank statement programs for our self employed clients, it makes it significantly easier to just utilize depreciation yearly. We can literally take the 24 month average and add it back into the monthly income.

Some lenders will allow you to add back in a percentage of gas mileage. Others that are more advanced can figure out ways to include the interest on any liquid asset you have.  

For you to be a successful investor you essentially need two things: A knowledgeable loan professional that has underwriting experience, and an excellent accountant.

Later on down the line add attorney that is superior in real estate law. 

Happy Investing!