How to file taxes the right way to continue to buy properties

[Travis Turnbull]

So I’m in a pickle and don’t know what to do. I have two cash flowing properties and told my new accountant that I am an investor and am looking to buy more properties. I got my returns back and my accountant had both them down as a loss on my return after deductions. I’m trying to buy another property now, but my mortgage broker is  saying my debt to income ratio is too high. Am I screwed? Please help. Is there anything I can do to fix this? Thanks.

-Travis

[Chris Mason]

Originally posted by @Travis Turnbull:

So I’m in a pickle and don’t know what to do. I have two cash flowing properties and told my new accountant that I am an investor and am looking to buy more properties. I got my returns back and my accountant had both them down as a loss on my return after deductions. I’m trying to buy another property now, but my mortgage broker is  saying my debt to income ratio is too high. Am I screwed? Please help. Is there anything I can do to fix this? Thanks.

-Travis

Before giving up, I'd have another lender double check it. Go to your local REIA, ask them who does their loans, call that person.

If you have a bunch of invoices/receipts for one-time repairs (hot water heater is one time, cleaning a carpet is not) that line up with what you wrote off for "repairs," provide that as well, and in the future see if you can "depreciate" stuff instead of "repair" stuff. In mortgage underwriter world, "depreciation" is assumed to be one-time (no impact on cashflow/DTI because it is "added back" to your net number), and "repairs" assumed to be recurring (cashflow/DTI hit), until and unless you can prove otherwise. Once upon a time a CPA letter could "prove otherwise," but most CPAs will not write letters these days because they don't want to be sued, so that avenue is mostly a thing of the past, ergo receipts/invoices being all that is left.

In general cashflow positive (actual, not tax return) real estate should improve your DTI, assuming the math is done right.