View in: Desktop
Copyright @2024 TigerDroppings.com. All rights reserved.
- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Posted by
Message
USDA Loan - Business Loss reported on prior Tax Return. Help!
Posted by sdedwar2 on 4/6/16 at 11:37 pm00
I really need some help here. I'm in the mortgage process and scheduled to close on a home at the end of this month; however, I have one issue. I have a salaried W-2 job that qualifies me for the mortgage; however, I had a small lawn business (on the side) that I started and dissolved last year where I reported a loss of $6k on 2015 Tax Return due to start-up costs. Do anyone have any knowledge of USDA not calculating this one time loss in my income? I did read a section of the USDA handbook that states the following:
Should I be worried at this point? My broker is now aware of this and will follow-up with the underwriter sometime tomorrow. As I dissolved the business, I didn't think to say anything about this on the front end until the underwriter pulled my tax transcripts. I totally forgot about it. Will they include the loss against my income? I know this is a bad situation, I don't need any scorns or chastisements right now. I can't sleep or rest right now.
quote:
The net income from the operation of a farm, business, or profession. The
following provisions apply:
• Expenditures for business or farm expansion, capital improvements, or
payments of principal on capital indebtedness shall not be used as deductions
in determining income. A deduction is allowed in the manner prescribed by
Internal Revenue Service (IRS) regulations only for interest paid in
amortizing capital indebtedness.
• Farm and non-farm business losses are considered "0" in determining annual
income. A negative amount must not be used to offset other family income.
Should I be worried at this point? My broker is now aware of this and will follow-up with the underwriter sometime tomorrow. As I dissolved the business, I didn't think to say anything about this on the front end until the underwriter pulled my tax transcripts. I totally forgot about it. Will they include the loss against my income? I know this is a bad situation, I don't need any scorns or chastisements right now. I can't sleep or rest right now.
This post was edited on 4/7 at 12:01 am
Since there is an income cap for USDA loans, the negative would actually help you in getting the loan. The part that you bolded seems to say that the loss will be treated as a zero so as not to give you an advantage.
It seems that the mortgage underwriter wants to subtract the $6k loss from my tax return income (before sending loan to USDA I suppose) which reduces my AGI on 2015 taxes. I'm just making sure that this will not actually happen. I should hear back sometime today hopefully. I did call a local USDA rep this morning and my understanding of this is correct. The business loss should not count against my income. I'm still nervous at this point and wondering if someone have knowledge or experience with this.
This post was edited on 4/7 at 8:10 am
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by TigerDeBaiter on 4/7/16 at 8:12 am to sdedwar2
Dude, no offense, but if $6k in income makes the difference in qualifying or not, you might be stretching it a little thin. You usually qualify for much more than you can realistically afford. Good luck.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by JamalSanders on 4/7/16 at 8:35 am to sdedwar2
I'm not saying you are buying too much house but if your income were to drop $6k and you not be able to afford the house, you might be buying too much house.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by sdedwar2 on 4/7/16 at 8:49 am to JamalSanders
Guys I thank you for the personal advice but not needed at this time. I can defenitely afford the house as my monthy mortgage payments with insurance included would be actually cheaper than apartments renting in my area. As I budget my monthly expenses each month, note I have never had a late payment ever, I'm frugal with my money, meaning I don't go out and buy clothes, I don't smoke drink, party, or take vacations. I'd rather have a house to live in and a car to drive. Being that I do not have a co borrower and it is entirely my own income, $6k which calculates to $500 a month is a lot of income. Subtract $500 from your monthly DTI and I'll probably say you can't afford your house either. I appreciate the comments. My Broker is working on this. I'll report back later. Thanks.
This post was edited on 4/7 at 8:51 am
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by LSUFanHouston on 4/7/16 at 10:26 am to sdedwar2
If the business closed in 2015, and you can show that it actually did, with documentation such as closing bank account, any documents filed with the state showing the company is shut down, etc, provide that to the underwriter. Basically you are wanting to show that the 6K loss will not happen in the future.
If you can give assurance that this is not a recurring thing, a good underwriter should be able to work through this.
If you can give assurance that this is not a recurring thing, a good underwriter should be able to work through this.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by JamalSanders on 4/7/16 at 10:34 am to sdedwar2
I'm not saying you cannot handle your money and that you are irresponsible, because nothing in your OP indicates that. I was merely speculating that $6k on a house isn't a huge amount of money. I can easily afford my rent if my income dropped $500 as my rent is less than 10% of my monthly income, but this thread isn't about me. You just seemed overly worried about what amounts to nothing in regards to your mortgage. And when people are worried about it that much it signals financial issues.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by GFunk on 4/7/16 at 1:55 pm to JamalSanders
The UW isn't thinking with his RD cap on. He's thinking with his regular products in mind and trying to UW based on that. Your broker needs to communicate back to him by showing him the policy that guides the income.
I don't see the AGI reduction as any issue whatsoever, especially considering the section you're referencing. You can confirm via paperwork that the business dissolved and is no longer capable of reducing your income as a result.
You can also confirm via paycheck stubs, written & verbal VOE that you're at your current POE making your current rate of pay. This should be way more than enough to overcome any stip regarding income requirements for RD.
It's good to be concerned, but don't worry too much about this. You should be good to go, bro.
I don't see the AGI reduction as any issue whatsoever, especially considering the section you're referencing. You can confirm via paperwork that the business dissolved and is no longer capable of reducing your income as a result.
You can also confirm via paycheck stubs, written & verbal VOE that you're at your current POE making your current rate of pay. This should be way more than enough to overcome any stip regarding income requirements for RD.
It's good to be concerned, but don't worry too much about this. You should be good to go, bro.
TD SponsorTD Fan
USA
Member since 2001
USA
Member since 2001
Thank you for supporting our sponsors Posted by Site Sponsor to Everyone
Advertisement
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by TigerDeBaiter on 4/7/16 at 2:01 pm to Golfer
quote:
Nah. We'd be fine...
Ditto
quote:
Golfer
quote:
Nah. We'd be fine...
$100-120 starter home in the LP/AP/Tangi area would definitely throw a DTI out of whack if it was reduced by $500/month for someone starting out or whose in a lower income bracket than you are.
He's got a point. Go easy on him...after all, the MT isn't just for OT Ballers
This post was edited on 4/7 at 2:03 pm
quote:
$100-120 starter home in the LP/AP/Tangi area would definitely throw a DTI out of whack if it was reduced by $500/month for someone starting out or whose in a lower income bracket than you are.
He's got a point. Go easy on him...after all, the MT isn't just for OT Ballers
I know. I'm just responding to his implication.
Yeah I'm just starting out. 24 years old, 2 years out of college, and so close to purchasing first home. I have to gather all my proof and the UW will send to management for approval. Please wish me luck!
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by JamalSanders on 4/7/16 at 4:46 pm to sdedwar2
quote:
Please wish me luck!
Good luck, you sound like you are good, over worried but good.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by iknowmorethanyou on 4/8/16 at 6:26 am to sdedwar2
You come here, asking for advice, then act like a douche when level-headed posters take the time to help.
Good luck. You'll need it.
Good luck. You'll need it.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by LSUFanHouston on 4/8/16 at 9:22 am to iknowmorethanyou
In all fairness, the OP came here asking for help on how a particular situation might be handled. He did not come here asking for advice on how much house he should buy.
Some people gave him unsolicited advice which he felt he did not need.
Some people gave him unsolicited advice which he felt he did not need.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by GFunk on 4/8/16 at 10:35 am to iknowmorethanyou
quote:
iknowmorethanyou
quote:
You come here, asking for advice, then act like a douche when level-headed posters take the time to help.
Good luck. You'll need it.
Hmmm.
quote:
iknowmorethanyou
quote:
act like a douche
Hmmm.
quote:
iknowmorethanyou
quote:
a douche
Hmmm indeed.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by hawkeye007 on 4/8/16 at 10:57 am to GFunk
tell me again why you got out of the business your knowledge level is damn impressive.
re: USDA Loan - Business Loss reported on prior Tax Return. Help!Posted by GFunk on 4/8/16 at 11:16 am to hawkeye007
quote:
hawkeye007
quote:
tell me again why you got out of the business your knowledge level is damn impressive.
First off, thanks for the compliment. It means a lot coming from you.
I could give you a lot of reasons, but what it boils down to is that I went from a really structured environment where I was almost totally commissioned to a really unstructured environment where I was almost totally commissioned.
I started at a company and ended up working at a smaller company and then for friends. The former I flourished and probably could've retired very happily. The latter two were just the wrong environment for me at the wrong time. I was in my early-mid-20's and didn't have a lot of focus away from work or at work on the 1st after I killed it on the 31st. The corporate environment I had more management and structure and it's definitely what I needed looking back.
It became a cycle and I didn't seem mature enough to pull out of it: grind your @ss off after getting annoyed with yourself and your spending habits and then coast and get impulsive with your checking account after I did well.
I had some financial goals that didn't involve such inconsistent-if not awesome-paydays. It was a tough, tough decision. But sometimes you have to look yourself in the mirror and recognize your strength is honestly a weakness.
Never lost the itch though. Not for a second. I'm hoping the Notary stuff can scratch a bit of it with me pushing for business, marketing myself and putting together a side hustle from where I'm at now. I feel like I'm a little more stable now and the hindsight can prove beneficial now.
This post was edited on 4/8 at 11:19 am
Back to top
Follow TigerDroppings for LSU Football News