All Forum Posts by: Angie Menegay

Hi Bill Gulley: Sorry I didn't clarify the situation better. I'm actually the "original borrower" in your explanation :-). I sold the house as an installment sale with a mortgage I still owe my bank.

I report the interest I receive from the buyer as interest income. But I need to expense the interest I pay to my lender (the underlying mortgage). From what I've read, the only place for this is "Interest Expense" on Schedule A, which seems good.

As far as other costs (e.g. note servicing fee), the only place I can find is to claim them under "Miscellaneous Expenses" of Schedule A, but those are subject to the 2% AGI limit :-(.

I don't know where else to claim these legitimate costs to offset the interest income I receive from the buyer.

Thanks,
Angie

@Bill Walston: It's no longer a rental. I'd sold it as a seller-financed transaction (installment sale). Therefore, I report all of the interest I receive from the Buyer as interest income. But I need to expense the interest I pay to my lender (the underlying mortgage). From what I've read, the only place for this is "Interest Expense" on Schedule A.

As far as other costs (e.g. note servicing fee), the only place I can find is to claim them under "Miscellaneous Expenses" of Schedule A, but those are subject to the 2% AGI limit :-(.

Thanks,
Angie

For tax filing, where would expenses associated with a wraparound mortgage be reported? On Schedule A? Some examples would be interest paid to the underlying lender, note processing fees etc.

Thanks,
Angie

Take a look at this contract: http://www.trec.state.tx.us/pdf/contracts/20-11.pdf

You will see that most things are negotiable (there are blanks and checkboxes everywhere), and there are conditions in which you can get your EMD back, depending on which contingencies are being used. The most common contingency is Financing where you will get your EMD back if you cannot get approved for financing and you give the Seller notice within X days. There are other contingencies as well (sorry I don't want to write a book here).

Option period's length and amount are also negotiable. Typically, you'll pay $50-$100 for 5-10 days to inspect.

There is a lot more to a purchase contract than just a simple rule like that from your RE agent.

Hope that helps.
Angie

Tim Delp: Thanks. Yes the 1st formula feels more legitimate :).

For simplicity, yes, but I guess based on your previous answer, if I have other incomes, the formula would be as follows, correct?

DTI = (Total monthly recurring debts) / (Line 22 on 1040/12)

Paul Cordero Tim Delp

Thanks! So to confirm, you're saying the DTI formula will look something like this, right?

Note: I'm just using W-2 as regular income in this example - no other misc incomes. Also, the business is Real Estate Services, not rentals.

DTI = (Total monthly recurring debts) / (Monthly income based on W2 - Business Loss/12)

Angie

Hi,

Does anyone know how lenders factor in S-Corp loss for DTI ratio calculation? Do they take the loss, divide by 12, and add it to the debt portion of the ratio?

My apologies in advance if this has been asked before. I can't find any answers with my Googling skills (or lack thereof :)...

Thanks,
Angie

If this makes you feel any better, our PM doesn't send us money until the 15th of the following month. However, I knew it going in (it's in our contract).

How would you be able to list your properties in MLS?