Should you show a gain or break even when refinancing

[Erick M.]

When it comes to refinancing is it good to show a yearly profit on tax returns, break even or show a loss. Which way looks good to the bank??

[Stephanie Medellin]

@Erick M.  Is this for self employment / business income?  Showing a large profit will look the best to a bank.  Showing a loss is not going to help you at all.  There are certain expenses you can add back, like depreciation.

Lenders are tightening guidelines right now on self employment income.  Some want to see additional reserves or they will discount your income by a certain percentage.