I am working with a client right now on a complicated deal. You never know what you will find when you start setting up a Real Estate transaction. That to me is what makes this business so unique. My client is ready to take down a very nice exceptional deal and at the last moment, loan analysis shows too high a debt to income ratio
CASH..DON'T CLAIM IT
My client was told a year ago when he bought a home to rent out that he didn't have to show the rental income if paid in cash. He was told that he makes too much money and to just not declare it. That advice is highly questionable. As to future purchases, that means your current income has to carry the load of any purchase.
YOUR MINUS $1000
So if your tenant was paying you cash of $1000 a month and you don't report it, then you are using $1000 of your own income to make the payment. Fine, you saved a few bucks in the realm of the IRS....But now, a huge and profitable deal came your way and your thinking and acts that followed jeopardized it all. Your short the $1000 for the new deal
WE LOSE OPPORTUNITIES
The choices are to amend the already past income tax filing and or wait another whole year of doing things correctly and then moving forward. Of course the current opportunity may not be there. Bad advice can be very sticky at times not to mention that this behavior would not pass an audit. Remember, with an audit, it is not just oops I boo boo-ed, it is a penalty plus interest on your errors...
GAIN...OR LOSE?
You may gain in the moment...but you lose eventually when trying to save a dishonest buck here or there when the light is shined on your belief systems...
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