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Good for Tax Deductions – But Watch Your UEBE for Loan Qualification

UEBE are Un-reimbursed Employee Business Expenses.  Many times these expenses are deductible on your Federal income tax return, but get a tax expert's advice on them.  They can include (from the H&R Block website):

  • bonding
  • physical examinations
  • office supplies not provided by your employer
  • professional or trade association dues
  • research, lecture and writing expenses
  • safety clothes and equipment
  • union dues
  • personal tools and equipment
  • travel, meal and entertainment expenses (see Publication 463)
  • computers and mobile phones (see Publication 946)

All lenders today, especially for FHA loans, will examine your UEBE and deduct this amount from your gross income.  What made a great tax deduction at the end of last year can become a reduction in the amount of mortgage loan for which you can qualify.  Since all FHA mortgage underwriters now pull IRS transcripts, these deductions will surface.  Procedures vary, but many will average the last two years of UEBE.  If your UEBE is $20,000, and your gross income is $110,000, you'll end up at a $90,000 after this adjustment.You need to keep this in mind when getting pre-approved for an FHA loan, as this step is later in the process, and you don't want to over-estimate your purchase ability at the beginning.  It's not that you should change your tax strategies, but you need to be aware of their influence on your mortgage loan approval process.

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