A buyer’s tax filing strategy must balance the goal to pay as little in taxes as possible with the need to show enough income to qualify for a home loan. Here are three tax filing strategies that could improve a buyer’s mortgage qualification:
1. Self-employed buyers, who use the six month filing extension, may want to consider forgoing the extension and file early if their business was more profitable in 2014 than 2013. This will allow the mortgage professional to use the higher 2014 income.
2. If you are in a profession like sales where you write-off unreimbursed business expenses such as vehicle mileage, understand that the amount of these write-offs will reduce the income shown on your W2.
3. Remember when qualifying for a mortgage, a buyer’s self-employment income is determined by the business’s profit and the owner’s salary if he takes one. Aggressive use of business tax deductions may limit your ability to qualify for the dream home you plan on buying this year.
A home purchase is the single largest financial investment for most home buyers. Preparing to buy a home starts with a tax filing strategy that ensures a buyer will realize the dream of home ownership by year’s end.
Article By: Tana Hubbard
Evolve Bank & Trust