Are You Self-Employed?
James DeVuyst • February 1, 2022
Calling all self-employed clients.
With a new tax year upon us and filings due for April 30th, 2022, all self-employed clients are in a lending sweet spot. Currently, as your accountants are working on your 2021 taxes, self-employed clients can discuss business expenses or dividend draws prior to completing their T1 Generals.
If you are looking to purchase, refinance, or pay your 2021 taxes, these tips are for you.
- Did you know that lenders only take the current tax year for your line 150 income if it’s decreased from the previous tax year?
- Normally lenders will take a two-year average, however if your income is lower in the current tax year (2021) they will only use that income and not a 2-year average.
If you’re restructuring your income, you must make sure it’s consistent over both tax years.
Example – If in 2020 you take a T4 income and in 2021 you take a dividend income, banks will not use a 2-year average. You need to make sure both years are the same source of income. If not, this will lead to a large document request and even sometimes your income not being used to service your application.
Did you know that you can roll your most recent taxes owed into your mortgage?
If you have a large tax bill for 2021 you can pull the equity out of your home to cover this and not have to take a personal income tax hit for 2022 if you don’t have the funds.
*You must have your 2020 income taxes already paid before being allowed to do this*
Give us a call today for your personalized financial plan for 2022!
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