Tax returns

[OKRICHLAND]

Hello everyone,
OKRICHLAND here.

I am having some difficulties with debt to income ratio
when it comes to filing my taxes.

I do a lot of the major work myself (Carpentry, Plumbing, Etc, Etc.)...
I also have pay-outs to all of my crews.

I live off of the draws on my lines of credit and refi profits.
As a person is not supposed to claim these moneys' as income because they
are in the form of a loan, How do I show that I made a certain amount as income so that the lenders will still like dealing with me?
thanks in advance,
Dave R.

[dealmaker]

Well I've taken a couple of days to reply here as I've had to think on it a bit. I'm not sure what debt:income ratio has to do with filing your taxes. Do you mean income and expense?

You may be doing your DAY TO DAY spending off your draws, but you're LIVING off your profits. If that weren't the case you'd be sinking deeper and deeper into debt. I think it's just a matter of which terms you're using here.

You're correct, lines of credit aren't income, they're loans that must be repaid. Defaults can turn them into income and that leads to a whole lot of other problems.

I'm guessing you do a simple spreadsheet on Excel or other to track income and expense per property. Having those on hand when approaching the bank would go a long way to making your case. That plus any other income statments, job, etc.

Hope this helps.

dealmaker

[OKRICHLAND]

Well I've taken a couple of days to reply here as I've had to think on it a bit. I'm not sure what debt:income ratio has to do with filing your taxes. Do you mean income and expense?

You may be doing your DAY TO DAY spending off your draws, but you're LIVING off your profits. If that weren't the case you'd be sinking deeper and deeper into debt. I think it's just a matter of which terms you're using here.

You're correct, lines of credit aren't income, they're loans that must be repaid. Defaults can turn them into income and that leads to a whole lot of other problems.

I'm guessing you do a simple spreadsheet on Excel or other to track income and expense per property. Having those on hand when approaching the bank would go a long way to making your case. That plus any other income statments, job, etc.

Hope this helps.

dealmaker
Thank you for your response.
I had a CPA tell me that I could not file any of my refi profits as income as living expenses (Food, shelter etc.) because the profit is in the form of a loan.
Same thing with any excess money that I have from my lines of credit that I might want to use as living expenses.
Since I don't sell any of my houses,
how do I show actual income an on my tax returns without being fraudulent to the bank or the IR....? You know.

[Las Vegas Real Estate]

Hello everyone,
OKRICHLAND here.

I am having some difficulties with debt to income ratio
when it comes to filing my taxes.

I do a lot of the major work myself (Carpentry, Plumbing, Etc, Etc.)...
I also have pay-outs to all of my crews.

I live off of the draws on my lines of credit and refi profits.
As a person is not supposed to claim these moneys' as income because they
are in the form of a loan, How do I show that I made a certain amount as income so that the lenders will still like dealing with me?
thanks in advance,
Dave R.

I would start by finding a very aggressive lenient lender who will work with you with your situation. They are out there.

[Aldo]

I'm not an accountant or CPA, but here's a thought. Consider forming an entity (LLC, S-Corp, whatever - but, NOT a C-Corp) and have that entity pay you an hourly wage or a monthly salary. My company pays me $X per month regardless of the source. Crunching the numbers could be a problem due to your regular pay schedule and the entity's irregular income. I guess that's why they created CPA's. They can do more with numbers than I've ever been able to do with a rubberband.

[OKRICHLAND]

I'm not an accountant or CPA, but here's a thought. Consider forming an entity (LLC, S-Corp, whatever - but, NOT a C-Corp) and have that entity pay you an hourly wage or a monthly salary. My company pays me $X per month regardless of the source. Crunching the numbers could be a problem due to your regular pay schedule and the entity's irregular income. I guess that's why they created CPA's. They can do more with numbers than I've ever been able to do with a rubberband.

Excellent insight Aldo.
That's exactly what I am doing.
My S Corp is paying me on a contract bases per property.
I know owe Uncle Sam over $8,000.00.
I will refinance a house to pay him so that I can buy 10 more houses this year.
By negotiating my lowest bid on each house and then knocking off a thousand dollars from that I should actually make a couple of thousand. (That's looking at it optimistically):cool:

[Aldo]

You mentioned looking at this optimistically as if there was another way to look at things. Am i missing something?