Capital Gains (Income) - A capital gain or loss is generally a one-time transaction; and, therefore, should not be considered as either a gain or loss in determining income. However, if the borrower has a constant turnover of assets that produces regular gains and losses, the capital gain or loss may be considered (e.g., a person who buys old automobiles, restores them, and sells them for profit). If the borrower has operated in this manner over a sustained period, an average of gains or losses may be developed, as long as the borrower provides evidence that he or she owns additional property or assets that can be sold if extra income is needed to make future mortgage payments. Personal tax returns must be reviewed to get an accurate picture of the average earnings from this source. For example, an asset sold during the year might be an income-generating asset, resulting in a reduction in future income after the sale. All of the following income documentation is required: A minimum of the most recent two years personal tax returns with all schedules. In some cases, additional years’ tax returns may be required. Evidence of ownership of additional property or assets
Posted on: Tue, 22 Apr 2014 21:09:34 +0000
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