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USDA Loan - Business Loss reported on prior Tax Return. Help!
Posted on 4/6/16 at 11:37 pm
Posted on 4/6/16 at 11:37 pm
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 4/7/16 at 12:01 am
Posted on 4/7/16 at 7:17 am to sdedwar2
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.
Posted 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.
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