Can't Finance Rental Home Due to Loss Reflected on Taxes

[Eric Villafana]

Happy Sunday!

I was recently in the process of gaining a pre-qualification for purchasing an investment home (buy and hold rental). 

Our starting target range ~$100K. I spoke with a lender who was referred to me by my real estate agent and he pretty much told me that I have zero chance of financing an investment property for the next few years. 

The primary reason given is that my 2016 tax return shows a loss of ~$10.9K on a rental home we own in Maryland.

I'm fairly certain that I miscalculated the depreciation on the house. We moved and began renting it out in August. The depreciation from August should only be about $4.5K but when inputting the date of business use, I put the purchase date (July 2014) versus the date we began leasing it. That resulted in the depreciation being counted for the entire year ($11.1K) versus just  a quarter of the year.

There are a couple questions I have.

1. If/when I amend my return, should I also look at adjusting the other expenses originally claimed (Specifics below): 

Advertising: $150   

Auto and Travel: $108,    

Cleaning and Maintenance: $2,363   

Commissions: $2,600   

Insurance: $ 306

Mortgage Interest: $6,572

Repairs: $360 

Taxes: $2,051

Depreciation: $11,131   

Other (replaced washer/dryer): $774  

-----------------------------

Total Expenses: $26,415

Bottom line from my Schedule

Rents Received : $15,430

Total Expenses : $26,415

Deduction for loss : (-$10,985)

-------------------------

If I amend and take out all things except for the taxes, insurance, commission and the correct depreciation, I would show a profit: 

Taxes: $6,572

Insurance: $306

Depreciation: $4,444

Commission: $2,600

----------------------------

Total Expenses: $13,922

Bottom line after proposed amendment

Total Rent: $15430

Total Expenses: $13,922

Profit: $1,508

I know this is a long post, so I appreciate and and all help. I tried to ask these questions to the mortgage broker, but he seemed less than interested in the matter.

Thanks in advance,

Eric Villafana