Did you know that Freddie Mac allows borrowers to use income reported on IRS Form 8825? Any income indicated on IRS Form 8825 is treated as self-employed income. Borrowers can account for this income even if they are not obligated on the commercial note. They can also use this income regardless of their ownership percentage. This is critical information for complicated business returns involving multiple entities.
What is IRS Form 8825?
IRS Form 8825 is also known as a “Rental Real Estate Income and Expenses of a Partnership or S Corporation” form. If you are a part of a partnership or S corporation, use Form 8825 to report income and expenses from rental real estate activities.
IRS Form 8825 considers gross rents as rental real estate income. Rental real estate expenses fall into the following categories:
- Advertising
- Travel
- Cleaning/maintenance
- Commissions
- Insurance
- Professional fees
- Interest
- Repairs
- Taxes
- Utilities
- Wages
- Depreciation
Clearing the Confusion for Eligible Borrowers
If you are a part of a partnership or S corporation and have earned rental real estate income, Freddie Mac’s Form 91 will help you account for these earnings when you are ready to borrow for your next business venture. If you have seen this form before, we know what you must be thinking: It looks complicated! An experienced loan officer will help you complete this form accurately to understand what programs are best for your unique borrowing situation.
MortgageDepot Takes Their Business (and Yours!) Seriously
When you are ready to expand your real estate portfolio, it’s important to know your options. If you are a partnership or S corporation seeking a Freddie Mac loan, MortgageDepot can help! As a wholesale mortgage broker, we have access to multiple Freddie Mac and Fannie Mae lenders. We dig deep to find the most suitable programs for our clients. Contact us to learn more about how to get your business and real estate goals in line!
Connect with one of our loan consultants to learn more.
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