Income eligibility test and declined mortgages!

Its in every business person’s interest to pay out as little as possible in expenses while retaining as much value within their businesses!

Whoever is following the US elections must already be ware of President Trump paying only $750 in federal income taxes and many are asking of how it is possible for a billionaire to legally pay only that much in taxes when they have earned millions in Income?

This shows how important Ownership structuring is to businesses. How you set it up matters, especially for property businesses given the value and tax risk exposure! Its worth noting that paying of taxes is about legal compliance to tax regulations and not about charity or morality.

In an Airbnb and Uber economy, even bottomline income becomes fashionably earned with flexible working hours, call it the democratisation self employment! However, on the higher end, for example, UK additional rate of income earners the income universe is complex. This makes how one earns income to become a case of legal creativity and also the expertise of your advisers. Will you take a salary, prefer a pension pot boost, take a bonus, invest in small companies to get tax reliefs, donate to charities or choose to work through personal structured vehicles? The options are variable!

This causes fluctuations in one’s reported income and if there is anything #Mortgage lenders hate, its the risk that their money is a carrying a risk of a payment default. Its a major cause of why many Self employed people have had a tougher eligibility testing when applying for a mortgage.

And while the reasons for the fluctuations in income can be reasonable and at times even temporary, making sure that this is well documented is helpful in making your income structure understandable when applying for a mortgage.

Private banks and other specialist lenders who we work with to help the Self Employed take a common sense approach, at times even taking to considering how much assets such clients have under management. Effectively, its not all doom and gloom!

If you are structuring your income or considering income restructuring, do look at the big picture as well! Saving yourself some expenses feels good but what will happen if a certain level of income will be required to earn you certain privileges like in Mortgage eligibility testing?

Talk to us about being #SelfEmployed and #SelfEmployment mortgages for your #Propertydevelopment or #PropertyInvestment!!

Email the writer at: [email protected] for discussions about UK Property tax, Bridging finance and Development finance, general property finance, ownership structuring, Property Investments and Property Development.

The article is for general information only and not intended to be advice to any specific person. You are recommended to seek professional advice before taking or refraining from taking action on the basis of this publication or other publications and contents of this page.

William PW Omony MBA is a Property Investment Strategist, Property Finance and Property Tax Consultant at @Proactive Consult. A firm of Accountants who also provide unregulated property finance intermediation. Delivering agile innovative strategies for Property Investment, Development, Trading and Refurbishment.