Per Diem and buying a house?

Schedule A = deductions from income = debt, when calculating the debt to income rato ... really a simple concept.

 

You have NO IDEA what you are talking about, and you couldn't be more wrong.

Deductions are expenses and are income statement items. Debts are liabilities, and are balance sheet items. There is NO debt on schedule A. You can't deduct debt, only expenses. To claim that expenses = debt is a massive fail on your part.

But the ball is in your court. Tell us specifically what items on Schedule A are debt. List them by name, and explain how they are debts.

 

I used to sell real-estate.

A per diem is NOT LAWFULL INCOME, it is a reimbursement of money you should have spent for business purposes. That is why you do not pay taxes on it. The law does not allow licensed lenders to consider non income sources. Only earned, unearned and structured payments (govt. , court ordered , trust etc) are allowed on the income side. They are looking at your net income after business expenses (aka profit).

To the schedule A conversation.
On line 4 under medical, if it non recurring they should exclude it.
Line 9 (taxes) is counted against you as you have to pay them.
Line 15 (interest) is counted against you, as you have to pay them.
Line 19 is excluded, as you can stop at will.
Line 20 casualty is averaged over time.
Line 27 is averaged over time, as they are recurring costs of your business/job.

Lenders can and will consider documentation that any of the above obligations have been meet.

http://www.irs.gov/pub/irs-pdf/f1040sa.pdf

P.S. it is not called debt, it called declared expenses. Debt is the sum of all outstanding obligations listed on the credit reports and any private debts disclosed by the applicant.

 

Reading this like a loan offer , it translates to 1/3 of my gross income goes to expenses. Sorry, but financially that is what you are saying.

Translation: I was working with an idiot of a Realtor, or I refused to listen to them.

You should have tried to qualify for a 136K 3% FHA loan, then picked a house in at 160k, submitted a 155k offer and submitted proof you can put the other 16k down as cash on top of the LTV after appraisal. This would have eliminated any fear of the seller you would come up short if the property appraised a little low, and moved your offer to top spot, unless there was a cash offer on the table.

 

The loan officers would pre-qualify me for 160K send me out looking at houses, have me make an offer, the offers were accepted, THEN they would drop the hammer on me and say "oh we are sorry, we can't lend you the money after all". The number one most frustrating and embarrassing situation I've ever been through in my life.
I think that I would give up on the "American dream" before I would go through that again.

So back to square one. No other options but #1 don't buy a house or #2 don't take the per diem deduction and take it in the shorts on my taxes.

Oh, I guess there is a #3....move to a country with more financial freedom. There are now quite a few that rank above the good ol "land of the free".....

 

I thought you could only claim 80% of $58.00 per day away from home.

Beyond that, who says you can't be paid per diem in part and still take the per diem deduction minus the per diem already paid?

 

Again bad realtor. You have been told to ask for pre-approval, not pre qualify. Pre-approval takes about three days but it is solid, the only outstanding issues is appraisal value and the effect of tax and insurance on escrow payments, which vary by property.

 

Who told you that??
The rates are set in stone for the particular tax quarter you are claiming them for. The tables are the max allowed with out receipts...You can always claim actual costs with receipts. Note if you re in a sleeper you can not claim the lodging part of it. You should be using IRS notice 2013-65 going forward. If your tax prepare doesn't know that GO FIND ANOTHER ONE.

Have you been told to keep track of where you stay each night, because some areas have a higher approved per diem that others...If not you need a new tax preparer.

 

I asked for pre-approval after the first couple of rejections. I explained that I didn't want to waste anymore of my, realtors or sellers time and get sellers or my own expectations up for an ultimate rejection. They acted like I was nuts and that no one had ever asked for that before. I just don't know....seems like such a convoluted and complicated system that nobody knows what is right or wrong any more. Government is regulating the country to a complete standstill.

 

The thing with per diem is that you have the cash in the bank, and then the other way, you you have income on paper.

so what do bankers like? They like credit and income, but they dont seem to mind credit and cash.

i never bought a house while on per diem, but I had no prob writing a check to buy my way into car (and other) loans, etc. "oh, you need a bigger down pmt? Here you go". If you have decent credit, there's a certain down payment amount where they can't say no.

im no longer on per diem, but I think it all works out the same. It's just that with per diem, you have to bank the extra take-home to give yourself the same buying power.