The Self-Employed Mortgage Mistake That Cost $18,000 (And How to Avoid It)

You're self-employed. You write off everything you possibly can. Your accountant is helping you minimize taxes. You're doing it right.

Until you try to get a mortgage.

Then you realize the strategy that saved you $8,000 in taxes just cost you $18,000 in extra interest because you can't qualify for A-lender rates.

Here's what's happening:

Lenders look at your reported income on your Notice of Assessment. Not your revenue. Not your gross. Your taxable income after write-offs.

So when you write off:

• Your vehicle

• Your home office

• Your meals and entertainment

• All your equipment

• Every possible expense

Your taxable income drops. You save on taxes. But lenders see lower income, which means lower borrowing power.

Real example:

Client earned $120,000 gross. Wrote off $45,000. Showed $75,000 taxable income.

Wanted to buy a $650,000 home. Needed to show $95,000 to qualify for A-lender rates.

Because they showed $75,000, we had to send them to B-lender at 7.2% instead of 5.1%.

Over 5 years, that "tax savings" cost them $18,000 extra in interest.

The painful math:

Saved $12,000 in taxes over 2 years by writing everything offPaid $18,000 extra in mortgage interest because of lower reported incomeNet loss: $6,000

Plus they're stuck at higher rates, building equity slower, and will have to refinance later to get better terms (more costs).

So what's the solution?

You need your accountant and your mortgage broker talking to EACH OTHER.

Before your accountant files your taxes, we need to know:

• Are you planning to buy a home in the next 2-3 years?

• Do you have a mortgage renewal coming up?

• Are you thinking about accessing equity?

If yes to any of these, we tell your accountant: "Here's the income your client needs to show to qualify for the mortgage they want."

Then your accountant can make strategic decisions about write-offs that balance tax savings with mortgage qualification.

This isn't about tax evasion. It's about tax STRATEGY.

Maybe you don't write off every single meal. Maybe you take more salary instead of dividends. Maybe you hold off on that big equipment purchase until after you've secured your mortgage.

You're still saving taxes. You're just not optimizing so aggressively that you kill your mortgage options.

If you're thinking about incorporating:

STOP. Talk to us first.

Incorporation is smart for liability and tax reasons. But some lenders want 2 years of corporate tax returns. Others want proof of retained earnings. Others won't lend to new corporations at all.

We've seen clients incorporate in January, come to us in November, and realize they've locked themselves out of A-lender financing for two years.

What we need from you:

If you're self-employed and planning ANY real estate moves in the next 2-3 years:

1. Tell your accountant before they file your taxes

2. Call us so we can coordinate with them

3. Let us map out what income you need to show

We wrote a book about self-employed mortgages (literally, ahem). We've seen it all. And we can help you balance tax efficiency with mortgage qualification.

Our advice is free. The coordination with your accountant takes one quick call. And it could save you tens of thousands in unnecessary interest.

Never be too shy to call. This is exactly what we're here for.