Accounting Questions that accountants don't know (ugh)

[Aimee Tarte]

Hi everyone!

So I have asked multiple accountants and even tried to do research on my own but was unable to get any answers. These may be obvious questions, but I hope you all can help.

1. How am I supposed to show enough income in order to qualify for loans and refinancing but still take deductions and take advantage of tax breaks from real estate?

2. What is the minimum income needed for FHA and 203k loans?

3. I have a business and its an LLC and S corp, so being self-employed but having rental income, what are the best tips for being able to set myself up to acquire buy-and-hold properties?

Thanks in advance for your knowledge. I appreciate all responses. 

[Michael Plaks]

@Aimee Tarte

1. With very few exceptions, your income is what it is. If you have deductions, that means you pay expenses, and that means your income is less. You cannot show one picture to the IRS and a different picture to the lenders - that would be either tax fraud or mortgage fraud.

One notable exception is depreciation. This is a tax deduction for which you do not write a check. Lenders ignore (add back) depreciation, so it does not hurt your loan eligibility.

There're some advanced tax preparation techniques to delay some deductions and show higher income. You will need professional help for that. Keep in mind that it inevitably results in paying higher taxes. Choose your pain.

2. This question is for lenders and not for accountants. Again, you cannot manufacture income. It is what it is, with little room to maneuver.

3. You did not disclose what business you operate and what are its financial results. Mentioning an S-corp and rental income in one sentence worries me. You should not put rentals in an S-corp. 

Overall, it sounds like you need to find yourself an accountant specializing in real estate. There're 20+ of us here on this forum.