Updated almost 5 years ago on . Most recent reply
I have to pay 20k to the IRS to play the RealEstate game
I’m 21 and self-employed. The past 2 years I haven’t had my business on paper, so to do that I have to file my taxes. Normally I wouldn’t hesitate, but I realized for me to qualify for a good mortgage I have to take the loss in write-offs for 2019 and 2020.
2019: I made 40k (owe the IRS 9k)
2020: I made 60k (owe the IRS 12k)
2021 I’m projected to make 80k.
My question is, is it worth it to pay up the taxes NOW and buy a property by the end of 2021 (that’s when I should have around 40k for a down payment), or should I wait a year to see if the market is potentially going to drop. If I wait a year that means I’ll most likely be able to qualify for a bigger mortgage, but it means I won’t be able to buy a property until 2022. I hear that the sooner you get into real estate the better.
Also, what are your thought on buying a home as a 21 year old to live in, NOT to rent out. I’m in Tennessee, so you can get a big house for a bang for your buck. It’s comforting knowing that I would own a home.
Most Popular Reply
#1, Keep the tax man happy. Don't risk the ire of the IRS.
Personally - I doubt we are headed for a major correction in real estate like the Great Recession. Lending standards are tighter now. Mortgage forbearance will likely be extended as long as needed to avoid a collapse of the market. And let's be honest, the incoming administration is more likely to issue stimulus packages than the outgoing one. The Fed is going to keep rates low for a very long time as well.
Being 21 and buying a house is great. Rent out a couple of rooms and get that space generating some income! Don't just buy the biggest property you can get a mortgage for. Learn to look for value.