Tax Returns and Buying A Home in Woodbridge, VA

Taxes Returns and Buying A Home in Woodbridge, VA

Well, the time is here to have your taxes prepared and returned to the IRS. For some this is a very stressful time of the year. For others this is the time of the year to collect a tax refund and maybe buy your first home.

Tax refunds and buying a home can go hand in hand, if you need cash for a downpayment, closing costs, or to pay off debt.

Throughout 2010 you heard, "Interest rates are low and home prices are even lower, so now is the time to buy a home in Woodbridge, VA." So here is something I want you to consider when you are preparing your 

tax returns and considering a home purchase...



The income we use for mortgage qualification is your  adjusted gross income after deductions/writeoffs (regardless of what your year-end W-2 states). So be mindful of the liberal tax deductions you claim to reduce your taxable income (which for most, ultimately leads to a larger tax refund or smaller tax bill).

Here is a very simplified example of how a W-2 Employee did not qualify for a larger home due to larger than normal tax deductions:

Buyer Jane earns $70,000 per year, but she was qualified on $55,000. Jane listed on her Schedule A $15,000 in unreimbursed business expenses and losses from a side business she formed mainly to reduce her taxable income(it worked). But Jane also significantly reduced her buying power too.

In summary, I am not a tax professional, the IRS, or a  tax preparer , but I felt the need to share my experience with tax returns and buying a home in Woodbridge, Va, so you can see how your tax filings can affect your upcoming home purchase...it gets even more complicated for the self employed borrower....

 

Contact Markita Aldridge-Woods at (703) 929-2274 or via email for custom tailored mortgage solutions.

 

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Comment balloon 1 commentMarkita Woods NMLS#196099 • January 16 2011 11:52AM

Comments

Markita hopefully more people would contribute their tax returns towards buying a house instead of a 60 inch Flat Screen TV. Well written post. Have a great weekend.

Posted by Lanre-"THE REAL ESTATE FARMER" Folayan, I don't make promises.I deliver results.SOLD HOMES (Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC) about 7 years ago

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