Tax Form 2555 (overseas) filing for Loan Officers

2 Replies

Hi all,

I'm a US citizen but planning to buy rental properties in the US while living abroad. Since I work for a foreign company, I file Form 2555 (Foreign Income Tax Exclusion) along with my 1040. Basically, if you work abroad and earn under a certain amount and are paying taxes in the country you live, then for all intents and purposes, you don't have any 'taxable' US Income.

When talking to lenders who are not familiar with this form, they sometimes wonder why Line 37 on my 1040 essentially says "0."

Anyways, I'm wondering if anyone out there has put together a loan 'binder' that helps explain form 2555 to potential loan officers and what you included in it?

Or if anyone who works abroad has put together an e-binder to send to loan officers and what that looks like? (I've seen the post that @Bill Gulley wrote and it's been very helpful: http://www.biggerpockets.com/forums/311/topics/105012-what-to-include-in-binder-for-lender

Thanks!

This is what the fannie mae selling guide says about foreign income. and you can direct the loan officer to page 356 of the 2014 selling guide to reference this material.

Foreign Income

Foreign income is income that is earned by a borrower who is employed by a foreign corporation or a foreign government and is paid in foreign currency. Borrowers may use foreign income to qualify if the following requirements are met.

Verification of Foreign Income

Copies of his or her signed federal income tax returns for the most recent two years that include foreign income.

The lender must satisfy the standard documentation requirements based on the source and type of income as outlined in Chapter B3–3, Income Assessment.

Note: All income must be translated to U.S. dollars. If the borrower is not a U.S. citizen, refer to B2-2-02, Non–U.S. Citizen Borrower Eligibility Requirements, for additional information.

@Jesse Gonzalez

Thanks so much! That's a great help. I downloaded the guide and I'm reading through the sections. I'm going to definitely add parts to the loan binder.

I looked at your bio - you're in Sonoma County? Near Wine Country?

I'm from So Cal myself. Never been up that way - just got as far SF. But hope to sometime in the future.

I do miss the CA weather!

Thanks again and good luck in all your dealings.

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