Consumers do not realize all the aspects of tax returns that are considered by underwriters to approve mortgage loans. And far too often there can be "creative" accountants who believe serving their clients is best done by how much money they get refunded to the client.
To the consumers out there - be very very skeptical about creativity. For Example: 
1. If you are a W2 employee, you most likely do not have 60% of your income spent on unreimbursed business expenses.
2. If you don't have a mortgage you can not deduct mortgage interest.
3. If your job performance or salary is not tied to entertaining clients, you won't have a large meals and entertainment deduction.
4. If you park in an employer provided parking area, you won't have hundreds of dollars in parking fees to deduct.
and 5. If you take itemized deductions you most likely (I am not an accountant or CPA but this would be a logical guess to me) can not also take the standard deductions.
Why does this matter you ask? I am not going to get into the legal ramifications as again I am not an accountant/CPA or an attorney. I am here to talk about purchase-ability. The amount of income used to determine your purchase ability is your adjusted gross income minus an "itemized deductions". In other words, If for example you make $50,000 a year but claim $40,000 in itemized deductions, you show $10,000 for $833. a month in available income for living. As you can see, claiming a lot of deductions reduced your purchase-ability. ( For those of you who are not familiar with how to read a tax return - hint... these are listed after adj gross income. Check lines 40 and below.)
Now back to the dangers of Pre-tax return pre-qualifications. If a lender provides a pre-approval for a real estate offer, it is just a pre-approval. If tax returns are not reviewed in a timely manner AND too many deductions were made, you just may miss the financing contingency boat and that boat will sail down the river carrying the Ernest Money deposit with it.
So when should tax returns be examined and made part of the "approval" process. Perhaps they should be reviewed prior to pre-qualification! After all, why take a property off the market, if even for only a week, if a simple question such as "how much did you deduct" can prevent a pre-qual "oops" moment. Just a thought.
As a Realtor, perhaps we should be asking our clients this question... after all the more we qualify our clients the better we are able to serve right? Or, with the information we can prevent the "oops" moment ourselves.
Whether you are a consumer or a Realtor, just remember .... deductions count and better pre-qualifications lead to more closing successes.
Happy Dealings to all.
Gayle Beyer - Broker
Welcome Center Realty
Port St Lucie, FL
772-336-8583
www.fla777.com
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