DTI question (loan, loan, properties, equity)

[gdproj]

Looking to buy a second home in the next couple of years and was told to not claim some deductions on my taxes to get my income ready for purchase. I will be using my salary plus bonuses as well as two rental homes for income. On my question i was not going to claim my home mortgage interest deduction on my rentals to be able to use more of the income for my purchase. I this ok to do, not claim the mortgage deduction?

[MrRational]

Originally Posted by gdproj

Looking to buy a second home in the next couple of years and was told to not claim
some deductions on my taxes to get my income ready for purchase.

Who told you this?

I will be using my salary plus bonuses as well as two rental homes for income.
On my question i was not going to claim my home mortgage interest deduction on my rentals to be able to use more of the income for my purchase.

Do you currently file a Schedule E for the rental business?
If you don't... why not?
And in either case... why are you showing income?

You can count on more questions and issues from not having one for this year if the
1040's from previous years (that you will be providing) have the Schedule C with them.
And yeah... they'll have seen rental property data before.

Is this ok to do, not claim the mortgage deduction?

I'd be far more concerned about all the OTHER business deductions you should be taking.
Who does your taxes?

[gdproj]

I file schedule e for rental income. And as a rental business if I do not want to claim the home mortgage interest deduction I feel its my prerogative to do it hence showing more income so I can purchase a vacation home. In effect I'm still collecting the rent money and showing it I'm just not taking as many deductions as I could.

[MrRational]

Originally Posted by gdproj

And as a rental business if I do not want to claim the home mortgage interest deduction I feel its my prerogative to do it hence showing more income so I can purchase a vacation home.

I get that you want to do that now. My question is what have you been doing?

In effect I'm still collecting the rent money and showing it I'm just not taking as many deductions as I could.

Again... why not?
My assumption is that you intend to remain in the LLing business...
if the situation is just short term until you can sell that can be different.

Also your use of the term "home" with "mortgage interest deduction" is odd.
Unless you live there... it should be a NOO loan.

[gdproj]

Only been doing this two years claiming as much as I can to deter the tax burdens on the rental. I was just saying for the next two years I want to claim less deductions On rentals so I can get some help on the dti side so I can get a vacation home for family . Is that kosher is the question. I just won't claim any loan interest on the rental properties.

[SmartMoney]

The problem with the plan is it would only be one year and the income/losses would be averaged over a two years. So, while you'll be paying more taxes for 2012, you won't get the full benefit due to the averaging required.

Do you write off any unreimbursed employment expenses? File a 2106? If so, that's where I would start. IRS transcripts are now required so you will have to file pretty early so the transcripts would be ready. They take about 6 weeks after filed with the IRS.

[gdproj]

Will i need to have 25% equity in the rental to be able to use the income to purchase the second home or will 6 months reserves for the rental mortgage be enough.