Rental Property Investor · San Antonio, TX · Member since 2018 · 22 posts · 4 votes
Hello BP community, thanks everyone in advance for your help, recently sold my personal property and was able to gain a profit of about 53k which I am planning to use as a down payment for my first rental property. I work as an independent contractor and had an income of 65k for 2018 and no debts, which allows me to buy a property up to 301000, the problem is that i am doing my taxes now and if I deduct mileage for my car this will result in a 36000 income which allows me to buy a property up to $193000. The other option would be not to deduct the mileage, keep an income of $65000 and pay $11610 in taxes from my $53000 gain from selling my personal property. I am debt free, have listened to around 40 books related to real estate and rental property investing and want to buy my first property in the next 3 months.please advice what would be best in my situation.
Investor · Kirkland, WA · Member since 2017 · 310 posts · 271 votes
7y
My understanding is DTI is calculated using gross income, so your net after deductions should not factor in. Review with your lender to confirm.
As a generic answer, I'd have to stretch awfully hard to configure a specific scenario where I would want to pay $11k more in taxes than I could get away with while still getting the "all clear" from my CPA. Having the additional $11k for down payment or repairs is too valuable.
Rental Property Investor · San Antonio, TX · Member since 2018 · 22 posts · 4 votes
7y
@Tyler Mullen
I was told by the bank that they will consider only the $36k income if I am deducting the mileage and I am not on a w2 income. Thank you for your advice, any other input would be greatly appreciated.