Posted on: 02nd Aug, 2008 07:58 am
How does tax deductions lower qualifying amount on a mortgage qualifaction
Hi s99771,
It lowers it because if you write off the income in the form of an expense, then you are saying that you basically didn't make it. For example, if your gross income was $100k, and then you write off $25k in travel, food, etc, then in essence you net down to $75k, and that is your income.
So the good news is that you don't pay taxes on that $25k, but the bad news is that it reduces your income, therefore, reducing the amt of home you can be approved for.
Hope his helps,
Kim
It lowers it because if you write off the income in the form of an expense, then you are saying that you basically didn't make it. For example, if your gross income was $100k, and then you write off $25k in travel, food, etc, then in essence you net down to $75k, and that is your income.
So the good news is that you don't pay taxes on that $25k, but the bad news is that it reduces your income, therefore, reducing the amt of home you can be approved for.
Hope his helps,
Kim