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marybeth5455
New Member

Can i submit an amended return and take out a schedule E so I dont show a loss?

Can I amend the return showing a loss on my schedule E?  When applying for a mortgage on another home the bank takes the loss and it is difficult to be approved.

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Accepted Solutions
Opus 17
Level 15

Can i submit an amended return and take out a schedule E so I dont show a loss?

Well, you can't take out the schedule E, but you could claim less expenses.  Of course, you would pay more tax, and that would probably be considered mortgage fraud if you were caught.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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8 Replies
Opus 17
Level 15

Can i submit an amended return and take out a schedule E so I dont show a loss?

Well, you can't take out the schedule E, but you could claim less expenses.  Of course, you would pay more tax, and that would probably be considered mortgage fraud if you were caught.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
marybeth5455
New Member

Can i submit an amended return and take out a schedule E so I dont show a loss?

Thank you, should I not claim any income on Schedule E then for this year?
Opus 17
Level 15

Can i submit an amended return and take out a schedule E so I dont show a loss?

If you have rental income, you must report it.  Why do you think you can leave schedule E off your tax return?  Any time you under-report your income you will be in trouble with the IRS.  Anything you do to over-state your income could (potentially) get you in trouble with a lender if you use that over-stated income to borrow money.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
marybeth5455
New Member

Can i submit an amended return and take out a schedule E so I dont show a loss?

We have a bit of a unique situation though.  We have 2 houses that we rent to our children.  we live with one of them for 5 months and travel the other 7 months.  When I reported both as rentals last year they showed a loss of 28K so we couldn't get a loan for our new home due to being at 45% debt ratio. We are planning to sell both homes this year but are afraid we will show a large loss again and the bank will not give us a loan.  I guess we need a good tax accountant.  any other suggestions will be helpful.....
TaxGuyBill
Level 9

Can i submit an amended return and take out a schedule E so I dont show a loss?

Were you charging the Fair Rental Value for rent to each of your kids?

For the 5 months that you lived with you kid, were they paying full rent?  Did you ONLY deduct the expenses for the space that you did not use?
Opus 17
Level 15

Can i submit an amended return and take out a schedule E so I dont show a loss?

Yes, you should see a tax professional right away.

Generally, you can allow family to live in a home you own, and they can contribute to expenses, without having to report it as rental income.  Of course, you can't then deduct expenses (other than the usual provisions that allow you to deduct all your property taxes and mortgage interest on one main home and one second home.)

Also as TaxGuyBill raises, if you do not charge fair market value rent (the same rent you would charge to a stranger) then you are not allowed to deduct rental losses at all.  (You can deduct expenses up to the rent paid but you can't deduct additional expenses to show a loss.)  And then the fact that you share a house with one of the children makes it even more complicated.

Unwinding this arrangement correctly (considering depreciation and possible non-allowable losses) will probably need a tax professional.  

At that point, once you have decided that your present or amended returns are indeed the true and accurate returns, and were not created to hide a loss to show more income, then you could certainly use them in a loan application.  Your focus first should be on determining the correct tax treatment for this relationship and correcting your tax returns if needed.
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
marybeth5455
New Member

Can i submit an amended return and take out a schedule E so I dont show a loss?

thank you.  Now to find a tax professional.  We are currently spending the winter in FL.  Any suggestions where to start to find a reputable one?
TaxGuyBill
Level 9

Can i submit an amended return and take out a schedule E so I dont show a loss?

You are generally in pretty good hands if you go to an "Enrolled Agent".
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