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Do Tax Losses On Closed Business Hurt My Chances To Qualify For A Mortgage?

April 5, 2014 by Scott Sheldon

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No as long as the business is actually closed it should not hurt your ability to qualify from an income standpoint. For example let’s say you opened up the side business a couple of years ago, claimed some monetary losses on http://bayarearealestatetrends.com/your tax return, but have subsequently closed the business. Lender will not need to take the losses as a liability against your income which should not have any effect on your borrowing power.

What you’ll need:

  • documentation from the Secretary of State showing the business is in fact closed
  • an explanation of why the businesses closed and why the business losses were taken

However, if you presently own a business that is still running and you’re taking losses or showing lower income to avoid paying higher taxes which is customary showing larger profits, you could very well run the risk of not having enough income to qualify for mortgage loan you may desire. This is the conundrum if you will self employed borrowers deal with.

On one hand of the spectrum if you show maximum profits you’re going to pay income taxes on those profits, but at the benefit of being able to qualify for a loan substantially more easily. The other option is showing lower profits, lower income which keeps the tax man at bay, but at the expense of risking the chances of qualifying for a home mortgage.

Are self employed or own your own business? Been told you can’t qualify for a mortgage? Get a second opinion by getting a complimentary mortgage rate quote for your purchase or refinance today!

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Filed Under: Purchase Mortgage Loans Questions and Answers, Refinance Loans Questions and Answers Tagged With: buying a house, cash out refinance, home loan refinance, self employed

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1450 Neotomas Ave Suite 115
Santa Rosa, CA 95405
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Corporate Office 14511 Myford Road, Suite 100, Tustin, CA 92780. We at New American Funding take great pride in our customer service and make it our number one priority. We encourage you to contact us for complaint resolution or any post-closing questions you may have regarding the servicing of your loan. We strive to have your experience with New American Funding a stellar one. In the rare case that our service did not meet your expectations, please call our customer care hotline at 1-800- 450-2010, ext. 7100 or you may contact us by email customerservice@nafinc.com. Please leave a detailed message and we will follow up with you no later than the end of the next business day. If you are using a screen reader or other auxiliary aid and are having problems using this website, please call 800-450-2010 Ext. 7100 for assistance.

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