finance
WHY SAVING MONEY ON TAXES MAY COST YOU YOUR DREAM HOUSE b y Ly n n G a g n e
A common dream of many entrepreneurs is one day buying their dream home. A status symbol for some, it’s the manifestation of years of hard work, determination and success.
And then you hear the last thing you expected: “I’m sorry, but you don’t qualify.”
Others just want a little corner of the world to call their own.
How did that happen? Whether it’s a dream home, new home, or little starter-upper, the path to attainment is generally the same for business owners, whether you’re a sole proprietor or you own and incorporated company.
Your little business is up and running and you are making a little extra money.
If a home purchase is a future goal in your mind, then this is a must-know.
At last, you feel you’re there.
You don’t qualify for the purchase tomorrow. You qualify two years ago.
How to get here? Make the hard decisions. Grieve them. Work on yourself every day. Ask for help. Take steps to become selfsufficient and proud of yourself. It is always an equation, make more money or reduce expenses. If you cannot get the expenses off, you will need to use whatever method there is even if it is hard, ie. bankruptcy. It will not magically get any better, unfortunately. I heard this somewhere once “Embrace the suck.” It will not always suck. But it will at the start. Dream up that magical new life and what it will be like. Then make it happen. Off you go to your financial institution about that home loan.
12|
The formula is simple: money you made, minus the write-offs, equals what you pay taxes on. That number is called “net income”. Net income is important! It is what the bank looks for when they see if you qualify for your dream home. Claiming too many write-offs and setting your income too low will affect your credit for two years. Let’s say you make twenty thousand a year. On paper, at least. You could be taking a lot more money out of your business, but if that twenty thousand is a year is all you’re paying taxes on – which is really no tax at all – then you’re not going to qualify to purchase that home. The “net income” or the money you declared as your income, is just simply too low.
