Can your Tax Return limit your borrowing power?
Hey BP community...
I'm fairly new to the site, but been part-time investing for a few years. I have always done my taxes on my own (via TurboTax), and never seemed to be a problem. I admit I am not an accountant, but I was a finance major and keep good records of expenses, etc. As my deals have increased, and my time has decreased, I'm feeling the urge to hand this task over to a CPA.
Of course, I completed 2014 on my own just like normal. But I think I have run into a snag...and the reason for this post. The last two years I have been able to show losses on my RE deals (flips/rentals), but yesterday I started questioning my tax entries when I went to refinance my 2nd rental (that I have free and clear), and the broker told me that because my returns show losses from my real estate, they would not be able to fund a loan. Basically my taxable income had dropped from the prior year, and though they knew I would be able to make the mortgage payments, they weren't able to lend to me.
Granted, I'd never used him before, but it made me question myself and my tax abilities. I'd like to cash-out refi on my rental, to buy another, but I need to secure a mortgage for the additional cash. Do I need to amend my return? Or just check with another lender?
Thanks in advance!
Shawn