how to get rental income included when getting a mortgage

[Ryein Goddard]

I have had a rental for two years about to file for the third year in taxes, but before I do that I wanted to ask how I should file.

I have a lot of conflicting information in this regard and was hoping some one could clear it up so I can rest assured and get mortgage in the next few months.

So basically I have two rentals.  One is a single family home that has had the same tenant for over 2 years and always paid on time, but when we filed our taxes we had deprecation.  We were thinking of not using it when filing this tax year, but we are not sure if that is required because really we just want the income included so we can get another mortgage.  The second house is the house I am moving out of and about to rent and will of course be a new rental with a lease.

So is it possible to file my taxes with deprecation and still have it included with a mortgage broker, or do I need to just file without it?

Thanks

[Chris Mason]

Originally posted by @Ryein Goddard:

Yeah that is what I have read a lot.  Is that something that is published in a calculator?  I have just been using a spreadsheet, but not sure if I could verify my calculations some how?  Or is all the variables not standard?

 Here you are. Also note that overlays exist, to wit note that the Fannie Mae forms don't even include anything about a two year average, and specifically mention only "12 months" AND "borrower's most recent year [not yearS] of federal income tax returns" AND there is even a section for "property acquired during or subsequent to the most recent fax filing year," meaning Fannie Mae will actually go for counting rent BEFORE it's even on tax returns!

This actually makes it shockingly easy to vet a lender for REI-friendliness. All you need to do is ask about how rental income is calculated if you just purchased 123 Main St last month, and it's not on yet on tax returns. You know the answer from Fannie, so if you are told anything more restrictive than that, then boom you've just discovered the presence of REI-unfriendly overlays that will artificially limit your capacity to obtain financing when using that lender - basically, these overlays generally have the net effect of limiting you to one property per two or three years unless you are incredibly high income from your day-job.