Profile picture for JohnBoyOU812

Is is legal to redo past tax returns in order to qualify for a loan?

Hi, question for this group as I am feeling a little suspect here..I am a professional RPG tournament player with earnings in the past few years of well over 100k but deduct all of my travel expenses, etc so I am barely clearing 30k/year after deductions. I am in the process of attempting to purchase a home and my current mortgage guy is suggesting that I go back and redo my taxes for 2006 and 2007 without the deductions so I can use these to qualify for the loan I will need to purchase the home. Is this a legitimate way of qualfying for a home?

  • February 05 2009 - San Diego
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Answers (8)

Profile picture for BMFPitt
If I were you, I would slap yoru mortgage guy across the face for suggesting you massively increase your tax bill in order to fake a higher income to buy a house you can't afford.  But that's just me.
  • September 02 2009
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Not a bad idea and not illegal.  Just be prepared to pay those extra taxes you avoided.  When the bank executes the 4506 they should match your new returns as long as they're filed with the IRS properly. 
Also, you shouldn't need to go back to '06, right now you need '07 and '08.
Hope this helps!
  • September 02 2009
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Profile picture for sunnyview
I would agree that this poster should call a tax professional. I would also suggest that a review the good neighbor policy from Zillow here and the no spam/self promotion policy here might be helpful since many of your posts seem to include [content removed by moderator for being self promotional]. There are better ways of promoting yourself and your business on the site. Hope the links are useful.
  • September 02 2009
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Hi

You should contact a CPA or a tax attorney to discuss your situation.   Advice from other professionals such as Real Estate agents,  Loan Officers can cause you problems down line as they are typically not qualified to answer tax related questions.

Greg Godwin
San Diego Realtor
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  • September 02 2009
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Funny you asked.  I think our government will be seeing a lot more tax money these days as people realize they need to pay more taxes to qualify for a mortgage (a little conspiracy theory I have, but that' a topic for a blog article and not going to help you here).

You have a couple of options.  You could amend your past tax return, or you could rent for a couple of years and start paying more taxes now to prepare to buy in a couple of years.  

Borrowers are actually going back and amending their tax returns to qualify for a mortgage now that we no longer have stated income programs.  When a lender pulls the tax returns fron the IRS to verify your numbers (we are all being forced to do this these days), we get the amended numbers and you will not be turned down just because you amended the tax return.  This is acceptable but you need to check with your tax advisor about the consequences of amending your return - could be a red flag for an audit.
  • July 12 2009
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Profile picture for sunnyview
I would ask a tax attorney. You could do it legally maybe by going back and amending your returns sans deductions, but you would likely have interest and penalties to pay then. Also the "new" thing for the banks is a form that allows them to pull your returns directly from the IRS with your consent. If the bank did this and found the rewrite they could cancel your mortgage I think. The tax attorney won't cost your more than a $200 consultation. It is well worth it in my opinion.
  • February 05 2009
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Hi JohnBoy,

Contact a CPA or a tax attorney, I would not solicit that advice in a public forum.

Best of luck to you,

Mark and Kari Shea
San Diego Real Estate Professionals
REO, Investment, Buying and Selling Real Estate
  • February 05 2009
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From my understanding, a lot of banks will execute a 4506 T form, which is a request to see your tax returns that you've filed for the last couple of years.  If you alter your returns and submit them to the bank, you and your mortgage guy could end with not just a decline...but possibly more problems. 

Just my opinion, but I wouldn't reccomend it.


  • February 05 2009
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