Took to big of a deduction this year??

[Richard Arden]

I need some advice on how to tackle this issue I am having with funding.

I just refinanced my first deal and I am looking to get the second. I just talked to my broker about lending options and the news is not great. In accordance with my 2019 tax return I am not making enough income to qualify for a conventional loan due to all of the deductions I took using my rental. My broker advised me to contact my CPA to amend my schedule E to take less of a deduction. Maybe I would have to pay 2 grand of my refund back.

Should I continue down that path and take smaller tax refunds?

Should I find a hard money lender and refinance later?

Should I try something else?

I don't have anything in pipe yet. I am just in the planning phase.

[Linda Weygant]

Your mortgage broker is encouraging loan fraud and I'm super tired of hearing this from my clients.

Your rental takes what it takes to run.  Deliberately choosing to increase income or lower the expenses that were necessary and ordinary to run your rental is loan fraud, plain and simple.  

Now, if there were some grey areas where you made a decision to write something off immediately as opposed to depreciate it, such as through the De Minimus Safe Harbor, or you chose Bonus Depreciation instead of choosing to depreciate it over its useful life, that's one thing.

This is probably the sixth time in the last 2 weeks I've heard "my mortgage broker suggests I show income of $60,000 this year" or "my mortgage broker wants to know if you can move this from Schedule E to Schedule C" and any other number of complete bull-oney that makes me wonder what the heck these brokers think they are doing.  They are encouraging fraud when they say this stuff.

In my opinion, this makes the broker completely dirty.  If they're willing to "cut corners" in this way, what else are they doing that is wrong, illegal or will otherwise put you at risk?

If they don't want me originating loans, they need to stay the hell out of tax advice.

I'll get off my soapbox now.