When is it correct to maximize rental income reported on taxs?

[Wilson Lee]

When is it correct to maximize rental income reported on our SCHEDULE E (Form 1040) for additional mortgage qualifications?

For example, an investor already has a few preforming rentals purchased last year. Now that investor is depending on the income form the rentals to offset his debit to income ratio. Must this investor skip out on tax breaks, such as deprecation, in order to prove his income to the lending institution? Further more, would only bank statements, showing rental deposits and expenses, stand as proof of income? Even when the investors tax documents show a smaller annual profit. 


Thank you all

Lee

[Bill Gulley]

Deposits are NOT income, they are a liability with cash on hand for future agreements.

Better question is when is it best to take every tax advantage you can find to reduce taxable income? When you are not going to be seeking financing in the next 2 or 3 years. 

Overstating taxable income can take you to mortgage fraud, no one says you must deduct expenses, you must recognize depreciation at some point, but let's not overstate income to show up better on a loan application. :)