Cost seg downstream challenges

[Andrew Coulton]

Hi all,

In 2022 we completed a large cost seg study on our rental portfolio. We qualified for real estate professional status since my wife doesn't have a W2 and is hands on with our rentals. A very attractive tax savings option BUT does have a downside!

My company recently relocated us from Dallas to Chicago so we are trying to close on a primary residence house here however since our 2022 tax return shows a basically no income from the accelerated depreciation we don't qualify for conventional freddy mac fannie may loans.

I have started working with a mortgage broker on non-qm loans who will be OK with 10% down. Whilst she is providing options the interests rates (high 8s to 10) and broker fee 2.25% are high and require much larger amounts to close.  

Are there any lenders out there willing to work with us directly? Or does anyone has any other solutions for our situation?

Thanks for your help!

[Stephanie Medellin]

How is the depreciation reported on your tax returns?  Typically depreciation is added back and won't count against you when calculating rental income.