Real Estate

Self-employed mortgages

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  • Apr 22nd, 2017 7:06 pm
Deal Fanatic
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Nov 2, 2013
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Edmonton, AB

Self-employed mortgages

Any mortgage brokers here or anyone else know what line on the tax returns/Notice of Assessments lenders use to calculate income? Mine has told me both Line 101 (in the case of multiple employers) for some and Line 150 for others.


Also, if I incorporate part of my business (required for my trucking work), I was informed that Line 150 of its tax return is used. This would be a very small number after all the business deductions. Could I then pay myself dividends through it to my personal income, to get around this problem? Yes I will pay more tax, but it's better than shooting myself in the foot for financing my real estate.
Accountant (Public Practice)
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Sep 10, 2016
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To my knowledge it s your net taxable income which matters. So I increased my salary in my incorporation this year specially for the mortgage.

But even my knowledge is theoretical if not practical - so please keep us posted about how it goes.

Wish you good luck
Member
Jun 30, 2009
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Talk to the broker. I've always been told it's line 150.
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Nov 2, 2013
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Edmonton, AB
santafe wrote: Talk to the broker. I've always been told it's line 150.
I've talked to 3 and heard Line 150, but for my last home purchase, I was told Line 101 as the bulk of the income was employment (though I had other income under that line). I have multiple sources of income- employment, business, rental. Apparently generally it is line 150 but sometimes they make exceptions.

As of today I am incorporated as per WCB requirement for trucking businesses. But whether I do writeoffs via myself (the employee) as an employee or a business has implications on Line 150. It's strange because employment expenses do not reduce Line 150, but business expenses do- even though things like home office and motor vehicle expenses appear under both. These are the same costs incurred to earn income, but one write-off method shoots yourself in the foot while the other does not.
Pinaki wrote: To my knowledge it s your net taxable income which matters. So I increased my salary in my incorporation this year specially for the mortgage.

But even my knowledge is theoretical if not practical - so please keep us posted about how it goes.

Wish you good luck
Thanks- that's what I'm leaning towards too. I'll have to purposely inflate my income and use writeoffs under employment expenses instead of business expenses. Sucks because I pay more tax. But what can you do.
Accountant (Public Practice)
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Feb 2, 2014
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Toronto
FirstGear wrote: Any mortgage brokers here or anyone else know what line on the tax returns/Notice of Assessments lenders use to calculate income? Mine has told me both Line 101 (in the case of multiple employers) for some and Line 150 for others.


Also, if I incorporate part of my business (required for my trucking work), I was informed that Line 150 of its tax return is used. This would be a very small number after all the business deductions. Could I then pay myself dividends through it to my personal income, to get around this problem? Yes I will pay more tax, but it's better than shooting myself in the foot for financing my real estate.
For sole proprietorships:

NET business income for AAA rates.

Up to GROSS business income with a small rate premium.

For corporations:

Employment income for AAA rates.

Up to gross revenue on corporate financial statements with a small rate premium.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Penalty Box
Jan 13, 2017
456 posts
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also heard if you have more than 50% downpay, some will approve you with "stated income".
the more downpay the better chance you will get it approved.

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