Here's an important tip for investors or anyone who will show rental income at tax time.
Be sure your accountant is inputting the correct start date for your rental income on your schedule E to maximize your purchasing power.
This is especially important if your rental was only rented for a partial year due to renovations or renter turn-over. In most cases, your accountant will use the default highlighted 365 days above because this won’t make a difference from a tax payer’s point of view.
As An Example:
You purchased a new property, made improvements, and didn’t actually
begin renting to a tenant until October 1, netting $3,000 in rental
income for the year.
When you submit your income to underwriting for a new loan, you’ll want to make sure your income is $3,000 / 3 months or $1,000 / month, not $3,000 / 12 months or $250 / month.
The moral of the story is to always make sure your accountant inserts accurate rental days.
